Sai Silks’ IPO attracts lukewarm response, analysts raise concerns
Sai Silks Kalamandir’s IPO opened for subscription on September 20, 2023, and received a lukewarm response with a subscription rate of just 0.07 times. This is the company’s second attempt at the primary market, after it withdrew its IPO in 2013 due to subdued investor interest.
The company seeks to raise Rs 1,201 crore through the follow-on offer, which consists of a fresh equity issue worth Rs 600 crore and an Offer for Sale (OFS) worth Rs 601 crore. The shares are priced in the range of Rs 210-Rs 222 per share, with a face value of Rs 2.
Analysts have raised concerns about the company’s high debt levels, intense competition in the industry, and the fact that half of the issue size is an OFS. The company also has 30 percent of its promoter holdings pledged.
Despite these concerns, the company’s management is confident about its growth prospects. They plan to open 30 new stores in Tamil Nadu, which is a high-yielding state for the company. They also believe that their top-performing format, Varamahalakshmi silks, will help to improve their return ratios.
Investors should carefully consider the risks and rewards before investing in Sai Silks’ IPO.
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Market Summary for September 22, 2023
Indian equity markets closed in the green on September 22, 2023, supported by buying in select banking and automobile stocks. Sectors such as pharma, information technology, and metals were the major drags. Options data suggests a sideways to positive momentum in the near term.