Saraswati Saree Depot Ltd (SSDL) saw a strong entry into the market, listing at a premium of 21 percent on NSE at Rs 194 per share compared to its issue price of Rs 160. Market experts expressed mixed views on the IPO.
Amit Goel, Co-Founder and Chief Global Strategist at Pace 360, said that the issue appears fully priced based on FY24 annualised earnings and he expected a listing gain of around 28 percent. "We advise investors to record short-term profits following the IPO," he said.
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In contrast, Akriti Mehrotra, Research Analyst at Stoxbox, saw a more promising future for the company and emphasised its long-term potential. "Saraswati Saree Depot offers a unique investment opportunity with its well-established B2B saree wholesale business, which serves a large network of semi-wholesalers and retailers. The company's focus on sarees, complemented by a successful diversification into kurtis, dress materials, and men's suiting, has driven substantial growth in revenue and profitability," Mehrotra said. She further advised investors to hold their positions for the medium to long term.
Choice Broking also weighed in, recommending a 'Subscribe with Caution' rating. While acknowledging the company's successful strategies like the 'Utsav' events, which contribute 13-15 percent to annual sales, the brokerage pointed out that the saree wholesale industry is highly competitive and operates on low margins. Choice Broking said that while the valuation of Saraswati Saree appears to be discounted compared to the industry average, market competition and seasonal fluctuations pose challenges.
Also Read | Saraswati Saree Depot shares make a strong debut, list at 21% premium on NSE
Bidding for the Saraswati Saree Depot IPO ran from August 12 to 14, resulting in an overall subscription rate of 107 times. The Rs 160.01 crore IPO consisted of a fresh issue of 65 lakh shares aggregating to Rs 104 crore, and an offer for sale of 35 lakh shares totalling Rs 56 crore.
At 11 AM on August 20, shares of Saraswati Saree were stuck in a 5 percent upper band of Rs 203.70.
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