Sai Silks stock lists at 4% premium: Should investors hold, sell or buy more?

Sai Silks’ Rs 1,201 crore IPO was subscribed 4.47 times.

Sai Silks (Kalamandir) stock made a lacklustre debut on bourses on September 27, listing at a 4 percent premium over the IPO price. The stock later gained to as high as Rs 244 intraday on NSE, up 10 percent from the IPO price of Rs 222.

According to analysts, cautious investors may consider exiting their positions. However, long-term investors may remain invested as the company is expected to expand with new stores, which will eventually increase its revenue and overall growth.

Follow our live blog for all the market action

Shivani Nyati, Head of Wealth, Swastika Investmart, said that the company has the potential to grow its business, given its strong brand presence, expanding footprint, and focus on online sales in the long term.

Sai Silks’ Rs 1,201 crore IPO was subscribed 4.47 times. The retail portion, however, was subscribed only 0.91 times. Qualified institutional buyers had done most of the heavy lifting with their portion subscribed 12.17 times.

Sai Silks to ride apparel market growth

According to Sunny Agrawal, Head of Retail Fundamental Desk, SBI Securities, during the FY23-FY27E period, the apparel market in India is expected to grow at 18 percent CAGR from Rs 5.4 lakh crore (Branded Share: 50 percent) to Rs 10.6 lakh crore (Branded Share: 59 percent). Out of that, women’s India’s wedding & festive wear and the saree market are expected to grow at the CAGR of 20 percent/ and 17 percent to Rs 1.3 lakh crore and Rs 1.2 lakh crore, respectively.

Sai Silks (Kalamandir) Ltd is among the top 10 retailers of ethnic apparel, particularly sarees, in south India in terms of revenues and net profit in FY20, FY21, and FY22. “The company is likely to be the key beneficiary of the rapidly growing organised saree market underpinned by the addition of 30 new stores in the next 3 financial years,” Sunny Agrawal said.

Sai Silks will use the IPO proceeds for the setting up of 30 new stores at a cost of Rs 125.08 crore, two warehouses with a spend of Rs 25.4 crore, working capital requirements amounting to Rs 280.07 crore and to repay its Rs 50 crore debts.

Follow our live blog for all the market action

Should you buy, sell or hold Sai Silks stock?

Long-term investors may hold by keeping stop loss: Swastika Investmart

“In the long term, the company has the potential to grow its business, given its strong brand presence, expanding footprint, and focus on online sales. However, investors should be aware of the risks associated with the company, such as the competitive nature of the industry and the impact of economic downturns on consumer spending,” said Shivani Nyati. She advised cautious investors to consider exiting their position, but investors with a long-term view may hold it by keeping a stoploss.

Investors may remain invested: Choice Broking

Sai Silk is a premium brand for ethnic clothing, especially sarees, in the southern region. The company has boosted their profits due to their strong market presence. “We recommend investors hold onto their investments because we expect the company's expansion with new stores to increase their revenue and overall growth. So, it's a good idea for investors to remain invested,” said Rajnath Yadav, Equity Research Analyst, at Choice Broking.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.