Saraswati Saree Depot IPO sees massive 107.52 times subscription on final day

Saraswati Saree Depot IPO

Kolhapur-based saree manufacturer and wholesaler Saraswati Saree Depot continued to garner an overwhelming response from investors as the participants bought 107.52 crore equity shares, i.e 107.52 times the offer size of 1 crore equity shares on August 14, the final day of bidding.

The company aims to mobilise Rs 160.02 crore through its maiden public issue, which is a mix of fresh issuance of 64.99 lakh equity shares worth Rs 104 crore, and an offer-for-sale of 35.01 lakh shares worth Rs 56.02 crore by promoters.

Non-institutional investors (high net-worth individuals) remained in the leading position to boost the IPO subscription, buying a massive 358.65 times the allotted quota. At the same time, qualified institutional buyers picked 64.12 times the reserved portion, and retail investors bid 61.88 times the part set aside for them.

The public issue was subscribed 4.37 times on its first day of bidding, i.e. August 12, and 16.34 times on day 2, i.e. August 13.

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The company has reserved half of the public issue size for qualified institutional buyers, 15 percent for non-institutional investors, and the remaining 35 percent for retail investors.

Saraswati Saree Depot also does the wholesale business of other women’s apparel wear such as kurtis, dress materials, blouse pieces, lehengas, and bottoms. The company will spend Rs 81 crore out of the net fresh issue proceeds for its working capital requirements and the remaining IPO money for general corporate purposes.

The Dulhani family-owned company that earns more than 90 percent of its business from the sale of sarees has recorded a net profit of Rs 29.5 crore for the fiscal year 2024, increasing 28.5 percent over the previous fiscal despite tepid growth in topline. Revenue from operations during the same period increased by 1.5 percent to Rs 610.9 crore.

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The operating numbers for the year were strong as the EBITDA (earnings before interest, tax, depreciation and amortisation) in FY24 grew by 18.7 percent to Rs 40.4 crore with a margin expanding by 95 bps to 6.61 percent compared to FY23.

Meanwhile, Saraswati Saree Depot will finalise the basis of the allotment of IPO shares by August 16 and will credit equity shares to the demat accounts of successful investors by August 19.

Trading in its equity shares will commence on the BSE and NSE effective August 20.

Its IPO shares received great demand in the grey market, trading at more than a 50 percent premium over the likely issue price of Rs 160 per share, the market observers said. The grey market is an unofficial platform for trading in IPO shares till the listing.