Saraswati Saree Depot IPO closes today; Should you Bid? Check GMP & more

The unlisted shares of Saraswati Saree Depot are commanding a strong premium on the last day of subscription. Should you subscribe to the Saraswati Saree Depot IPO?

Saraswati Saree Depot IPO: The three-day subscription window to apply for the initial public offering (IPO) of Saraswati Saree Depot, which opened on Thursday, August 1, 2024, closes today. So far, the Saraswati Saree Depot IPO has received a positive response from investors, with the public issue being subscribed 16.48 times by the end of the second day of subscription.

Available at a price band of Rs 152 - Rs 160 per share and a lot size of 37 shares, the Saraswati Saree Depot IPO has been subscribed 20.62 times in the retail category and 57.34 times in the NII category, while the QIB category has received 1.32 times subscription.
 

 

Saraswati Saree Depot IPO GMP

The unlisted shares of Saraswati Saree Depot are commanding a strong premium on the last day of subscription. According to several websites that track grey market activities, Saraswati Saree Depot shares are trading at a premium of Rs 50 or 31.25 per cent from the upper end of the issue price of Rs 160. If the trend sustains, this could result in bumper listing gains for investors.

Saraswati Saree Depot IPO details

The public issue of Saraswati Saree Depot includes a fresh issue of 6,499,800 shares worth Rs 104 crore and an offer for sale of 3,501,000 shares with a face value of Rs 10 each, aggregating up to Rs 56.02 crore. Investors can bid for a minimum of 90 shares of Saraswati Saree Depot and in multiples thereof. The minimum amount required by a retail investor to bid for the Saraswati Saree Depot IPO is Rs 14,400.

Bigshare Services is the registrar for the Saraswati Saree Depot IPO, while Unistone Capital is the book-running lead manager for the public issue.

Should you subscribe to the Saraswati Saree Depot IPO?

Analysts at Choice Broking have recommended investors to 'Subscribe with Caution.' The brokerage, in its report, highlighted that Saraswati Saree Depot has been a significant player in the B2B sarees wholesale market since 1966 and has expanded into the wholesale business of other women’s apparel as well. The company has consistently achieved sustainable growth in both revenue and profit.

At the higher price band, SSDL is asking for a P/E multiple of 21.5x (based on its FY24 EPS of Rs 7.5). This valuation, according to Choice Broking, appears to be discounted compared to the industry average. The company is planning to diversify by entering the men's ethnic wear segment, aiming to increase revenue and expand its market presence. "However, the saree wholesale industry, where the company currently operates, is highly competitive and fragmented. This sector typically operates on low margins and is also subject to seasonal fluctuations. Given these challenges, we recommend a 'Subscribe with Caution' rating for this issue," said Choice Broking in its report.

Meanwhile, Shivani Nyati, Head of Wealth at Swastika Investmart, has recommended bidding for the Saraswati Saree Depot IPO with a high-risk tolerance and a long-term investment horizon. According to Nyati, the saree wholesale industry is highly competitive and fragmented, with low margins and significant seasonality.

Despite these challenges, Saraswati Saree Depot's P/E valuation of 17.93x appears reasonable, said Nyati. "Considering the industry dynamics, competitive landscape, and cash flow concerns, we recommend this IPO for investors with a high-risk tolerance and a long-term investment horizon," Nyati added.

Saraswati Saree Depot allotment, listing date

The basis of allotment of shares for the Saraswati Saree Depot IPO is scheduled for Friday, August 16, 2024, while the company's shares are likely to list on the bourses, including NSE and SME, on Tuesday, August 20, 2024.

About Saraswati Saree Depot 

Saraswati Saree Depot Limited is a key player in sarees wholesale (B2B) segment and its origin into the sarees business dates back to the year 1966. It is also engaged in the wholesale business of other women’s apparel wear such as kurtis, dress materials, blouse pieces, lehengas, bottoms, etc. On an average of more than 90 per cnet of its total revenues are generated from sale of sarees.