Textile IPO blitz in the works

Textile exporters are making a beeline for the primary market. At least 10 companies are expected to hit the primary market with issue sizes varying between Rs 100 crore and Rs 250 crore, according to Prithvi Haldea, managing director of Prime Database, the Delhi-based research firm that tracks the primary market.

"Orient Crafts and Provogue are likely to be the first off the blocks. A host of other textile companies will hit the market shortly," he said.

Nikhil Chaturvedi, managing director of Provogue India, confirmed that the Rs 110 crore company would shortly file a prospectus for an IPO with the Securities and Exchange Board of India (Sebi). It intends to offer 4 million shares.

"The proceeds raised through the IPO will be used for expanding our retail stores as well as for upgrading our manufacturing facilities," he said.

The shareholding of the Chaturvedi family, promoters of the company, will come down to about 66 per cent after the offer.

The other stakeholders are stockbroker Rakesh Jhunjhunwala and Bennett, Coleman & Company. The company plans to add another 22 Provogue studios to its current 53 stores.

Arvind Singhal, chairman of KSA Technopak, the research organisation that tracks the textiles industry, said the good response to the Gokaldas Exports' IPO which opened today, would push many more companies to come out with public issues.

"The big-ticket textiles exporters have traditionally been funding their expansion through internal accruals and recording a 30-40 per cent growth rate. Now, they dream of even quadrupling their growth rate, thanks to the abolition of textile export quotas. They need big money to fuel their growth plans," he added.

The list of big-ticket textiles exporters includes Orient Crafts, Provogue, Creative Garments, Eastman Exports and Gokaldas Exports.

Prices of most textile companies shares have outperformed the benchmark BSE Sensex for the past one year and some of them are being traded at historic highs, he added.

However, Premal Udani of Kaytee Enterprises, a leading Mumbai-based exporter, said that mid-sized textiles companies would take some time before hitting the IPO market.

"Mid and small size companies are in consolidation mode. They will come to the market only after the consolidation process is over," he added.