Wednesday, February 6, 2013

Sai Silks Kalamandir IPO

Sai Silks Kalamandir, a retailer of sarees, has come out with an IPO of Rs 89 crore. The company is in the business of retailing of sarees under the brand name of "Kalamandir". The company started as a retailer of sarees in Hyderabad in August 2005 and now operates 12 retail outlets, which cumulatively spread over in more than 97,621 square feet.

The IPO shall open on 11 February, 2013 and shall close on 13 Febraury, 2013. The company has fixed a price band of Rs 70-75 per share.

The company has provided a safety net feature to the retail individual allotees. Under this agreement, if the market value of the equity shares falls below the issue price at any time during six months from the date of credit of the equity shares in the demat account, the promoter and promoter group would buy the original allotted equity shares at the issue price from the eligible allottees up to a maximum of 1,000 equity shares per eligible allottee. However, the retail investor can purchase a maximum of 2,600 equity shares so the safety net is only for less than half of the equity shares. Nevertheless, this is a good offering to provide some safety to retail investors.

The company plans to utilize the proceeds of the IPO for setting up of retail outlets; expenses to be incurred for brand promotion; pre-payment of term loan facility; long term working capital requirement; and general corporate purposes.

Ashika Capital Ltd and Vivro Financial Services Pvt Ltd are book running lead managers to the issue. Bigshare Services Pvt Ltd is the registrar to the issue.

Recommendation:

ICRA has given Grade 2 to the IPO indicating below average fundamentals. We would not recommend this issue to investors at this time as there may be no significant upside. Even if the investor wishes to invest in this IPO to make some listing gains, invest for only 1000 shares and not the maximum of 2600 shares so you are safe under the buy back agreement.

Subscription:

Sai Silks Kalamandir did not manage to get fully subscribed. The IPO got 0.87 times subscribed largely due to support from retail investors.

At the close of the IPO,
QII segment did not get subscribed at all
NII segment got subscribed 0.43 times
Retail segment got subscribed 1.31 times

Allotment:

Visit this post again for allotment details!


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