Sai Silks Kalamandir IPO Review: Sai Silks(Kalamandir) is coming up with its initial public offering and it will be listed on both NSE and BSE. The IPO will be open from September 20, 2023,  and closes on September 22, 2023. 

In this article, we will look at Sai Silks Kalamandir IPO Review, analyze the company, look at its strengths and weaknesses and see what unfolds.

Sai Silks Kalamandir IPO Review – About the Company

The company commenced its operations in 2005. It is amongst the top 10 retailers of ethnic apparel, particularly sarees, in south India in terms of revenues and profit after tax in Fiscal 2020, 2021 and 2022.

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The company operates through 4 store formats i.e. Kalamandir, VaraMahalakshmi Silks, Mandir and KLM Fashion Mall, with 54 stores as of July 2023 in 4 south Indian states i.e. Andhra Pradesh, Telangana, Karnataka and Tamil Nadu, as well as through e-commerce channels comprising its website and other online e-commerce marketplaces.

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The company caters and offers products to various segments of the market which include premium ethnic fashion, ethnic fashion for middle income and value-fashion, with a variety of products across different price points, thereby catering to customers across all market segments.

The company offers a diverse range of products which includes various types of ultra-premium and premium sarees suitable for weddings, party wear, occasional and daily wear, lehengas, men’s ethnic wear, children’s ethnic wear and value fashion products comprising fusion wear and western wear for women, men and children.

Sai Silks Kalamandir IPO Review – Industry Overview

Currently, India ranks fifth in the world in terms of nominal gross domestic product (“GDP”) and is the third-largest economy in the world in terms of purchasing power parity (“PPP”). India is estimated to be among the top three global economies in nominal GDP by Fiscal 2050. 

The Apparel market size in Fiscal 2020 was US$ 55.9 billion (₹ 4,47,750 crore) and reached a market value of US$ 51.4 billion (₹ 4,11,750 crore) in Fiscal 2022. Between Fiscal 2022 and Fiscal 2027, the apparel market is expected to grow at a CAGR of 21% to reach US$ 133.53 billion in Fiscal 2027.

Apparel and accessories are estimated to have the highest share in the Primary Non-Food sector and are expected to show the highest growth at 20.38% CAGR over the next 5 years. The Share of Apparel and Accessories in overall retail is expected to further increase from 6.10% in Fiscal 2022 to 9.42% in Fiscal 2027.

Organized retailing share of Apparel has increased from 14% in Fiscal 2007 to 39% in Fiscal 2022. In other words, in the last thirteen years, organized retail not only captured the new incremental demand, but it has also succeeded in shifting the demand away from unorganized apparel retail in its favor. The share of organized apparel is expected to increase further to 49% by Fiscal 2027 and that will continue to support branded apparel as well.

Sai Silks Kalamandir IPO Review – Financials

If we look at the financials of Sai Silks(Kalamandir) it has reported assets worth 665.42 Cr in FY21 and 1220.45 Cr in FY23, the overall assets have almost doubled over the last 3 years.

In FY21 and FY23 the company generated revenue of 679.09 Cr and 1358.92 Cr. The rise in revenue is accompanied by increasing profits which have increased from 5.13 Cr to 97.58 Cr. Here we can see that the company’s revenue has doubled over the last 3 years accompanied by profits which have almost grown 20 times.

In terms of return ratios, in FY23 it had an ROE of 27.96% and an ROCE of 23.55%. These ratios indicate a good return to shareholders’ capital and an efficient use of company resources.

The company reported a Debt-to-equity ratio of 0.87 in FY23 which is a good sign as it indicates that the company has lower leverage in proportionate to its equity.

Financial Metrics

(Source: RHP of the company)

Competitors of Sai Silks Kalamandir

The Listed peers of Sai Silks (Kalamandir) are, Vedant Fashions Limited, TCNS Clothing Co.Ltd, Go Fashion (India), Aditya Birla Fashion and Retail Limited, Shoppers Stop Ltd and Trent Limited.

Strengths of the company

  • The company has a strong presence in the offline and online marketplace with an omnichannel network.
  • The company operates through 4 store formats Kalamandir, VaraMahalakshmi Silks, Mandir and KLM Fashion Mall thereby attracting and serving selected customers as per their preference in each store.
  • The company has a diversified range of product offerings thereby catering to different preferences of customers.
  • The company has a strong presence and brand value in southern states of India.

Weaknesses of the company

  • The business is highly concentrated on the sale of women’s sarees and is vulnerable to variations in demand and changes in consumer preference, which can have an adverse effect on the business.
  • The business is mostly located in south India and any adverse effects in these regions may affect its business and profitability.
  • The business segment in which the company operates has fewer barriers to entry and exit of players, thereby increasing the competition for the company.

Sai Silks Kalamandir IPO Review – GMP

No information is available about the GMP at the moment.

Sai Silks Kalamandir IPO Review – Key IPO information

IPO Size₹1201 Cr
Fresh Issue₹600 Cr
Offer for Sale (OFS)₹601 Cr
Opening dateSeptember 20, 2023
Closing dateSeptember 22, 2023
Face Value₹2 per share
Price Band₹210 to ₹222 per share
Lot Size67 shares
Minimum Lots1 (67 )
Maximum Lots13 (871)
Listing DateOctober 4, 2023

Promoters: Nagakanaka Durga Prasad Chalavadi and Jhansi Rani Chalavadi.

Book Running Lead Managers: Motilal Oswal Investors Advisors Limited, HDFC Bank Limited, Nuvama Wealth Management Limited.

Registrar to the Issue: Bigshare Services Pvt Ltd.

The objective of the Issue

The Company proposes to utilize the Net Proceeds towards the funding of the following objects:

  • Funding capital expenditure towards setting up 30 new stores
  • Funding capital expenditure towards setting-up of two warehouses
  • Funding working capital requirements of the Company
  • Repayment or prepayment, in full or part, of certain borrowings availed by the Company
  • General corporate purposes

In Closing

In this article we looked at Sai Silks Kalamandir IPO Review.

Through this article, we can see that the company has good brand value and a strong presence across south India which it has built over the years, with increasing customer base, revenue and consistent profits.

The company has good potential for future progress provided it expands its stores across various locations other than just South India and maintains its customer loyalty.

What do you think the future holds for the company, do you believe the company can shine considering its peers, Are you applying for this IPO? Let us know in the comments below. 

Written by Bharath K.S

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