The Rs 160 crore Saraswati Saree Depot IPO includes a new share sale worth Rs 104 crore. Additionally, the promoters are selling 35,01,000 shares, which total Rs 56.02 crore.
Saraswati Saree Depot IPO Opens Monday: Shares Priced at Rs 152-160, Bidding Until August 14
The IPO for Saraswati Saree Depot starts on Monday, August 12, and runs for three days until Wednesday, August 14. The company is offering shares at a price between Rs 152 and Rs 160 each. Investors can buy at least 90 shares, and in multiples of 90 thereafter.
Saraswati Saree Depot, established in 1996, makes and sells women’s clothing wholesale, focusing mainly on sarees. They also sell other women’s apparel like kurtis, dress materials, blouses, lehengas, and bottoms.
The Rs 160 crore IPO includes selling new shares worth Rs 104 crore, and the promoters are selling 35,01,000 shares worth Rs 56.02 crore. The company plans to use the money raised to fund working capital and for general business purposes.
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Saraswati Saree Depot gets its sarees and other women’s clothing from over 900 suppliers across India. They have a catalog with more than 300,000 different items. Most of their sales are in the southern and western regions of India, including Maharashtra, Goa, Karnataka, and Tamil Nadu. The company is based in Kolhapur and has showrooms in Kolhapur and Ulhasnagar.
For the financial year ending March 31, 2024, Saraswati Saree Depot reported a net profit of Rs 29.53 crore and revenue of Rs 612.58 crore. In the previous year (2022-23), their revenue was Rs 603.52 crore with a net profit of Rs 22.97 crore.
In their IPO, 50% of the shares are set aside for qualified institutional buyers (QIBs), 35% for retail investors, and 15% for non-institutional investors (NIIs).
Unistone Capital is the main manager for the IPO, and Bigshare Services is handling the registration. The shares are expected to be listed on both BSE and NSE, with a tentative listing date of Tuesday, August 20.
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Saraswati Saree Depot is a major player in the saree wholesale market, with a wide range of suppliers and customers. Their large product selection and ability to buy in bulk give them an advantage. While the company has consistently made a profit, they do have issues with negative cash flow, according to Swastika Investmart.
The saree wholesale industry is very competitive, with low profit margins and seasonal changes. Despite these challenges, Saraswati Saree’s price-to-earnings ratio of 17.93 is seen as reasonable. Given the industry’s tough conditions, the competitive market, and cash flow problems, the IPO is recommended for investors who can handle high risk and are looking at a long-term investment.
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Saraswati Saree plans to expand into men’s ethnic wear to take advantage of trends like multi-day weddings, growing popularity of traditional outfits during festivals, and new brands in the Indian wedding market, according to Canara Bank Securities.
The company has shown strong financial results, with Ebitda margins rising to 6.73% in FY24. Its Return on Net Worth (RoNW) is 45.49% and Return on Capital Employed (RoCE) is 64.46%, both well above industry averages. The company is also priced attractively compared to its competitors. Therefore, Canara Bank Securities recommends subscribing to the IPO.
StoxBox
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“With Saraswati Saree focusing on better inventory management, entering the men’s ethnic wear market, and boosting its e-commerce presence, we are positive about the company’s future growth. Given its reasonable price-to-earnings ratio of 17.9 based on FY24 earnings, we recommend subscribing to the IPO for medium to long-term investment,” said StoxBox.
SMIFS
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Saraswati serves 13,000 customers and expects this number to grow with its e-commerce efforts. The company aims to benefit from the expanding saree market, especially as organized retailers focus on mid to premium saree offerings. This growth is evident in the increase in average sales per customer for the company.
“We suggest subscribing to the IPO for a good long-term investment. The business is stable, and the new expansion into men’s ethnic wear could boost future growth. Plus, the company is priced attractively.”
Ventura Securities
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Saraswati Saree’s business relies on a well-established supply chain. They get their sarees from over 900 weavers and suppliers in major textile cities across India, such as Surat, Varanasi, Kolkata, Madurai, and Bengaluru. This wide network helps them maintain a steady and diverse range of products.
The company also has a strong retail presence and is investing in online sales to enhance its digital strategy. They are creating an integrated shopping experience across both physical stores and the internet. According to Ventura Securities, this approach is expected to boost growth, as online saree sales are forecasted to rise to 9-11% by FY29. Ventura Securities has given them a ‘subscribe’ rating.
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