Saraswati Saree Depot IPO opens on August 12: Price band to listing date, all you need to know

Saraswati Saree Depot IPO is all set to open for subscription on Monday, August 12. The mainboard initial public offering of the apparel and saree manufacturer is a book building issue worth ₹160.01 crore.

The IPO price band has been fixed at ₹152 to ₹160 per share. The promoters of the company are Shankar Dulhani, Mahesh Dulhani, Rajesh Dulhani and Vinod Dulhani. The promoters hold 100% stake in the company ahead of the public issue.

Ahead of the opening of the subscription window here are five things to know about Saraswati Saree Depot IPO:

Saraswati Saree Depot IPO: Offer size, lot size, minimum investment and other details

The initial share sale consists of a fresh issue of 65 lakh shares aggregating to ₹104 crore along with an offer-for-sale (OFS) of 35 lakh shares aggregating to ₹56.02 crore.

Saraswati Saree Depot has reserved 50% of the net issue for qualified institutional buyers (QIBs) and 35% for retail investors. The remaining 15% of the net issue has been reserved for the non-institutional investors (NIIs).

Retail investors interested in applying for Saraswati Saree Depot IPO can place bids for a minimum of one lot comprising 90 shares, aggregating to an investment of ₹14,400.

Small Non-Institutional Investors (sNII) can place bids for a minimum of 14 lots (1,260 shares), which translates to an investment of ₹2,01,600. Big Non-Institutional Investors (b-NIIs) can place bids for a minimum of 70 lots or 6,300 shares, amounting to ₹10,08,000.

Saraswati Saree Depot IPO dates

The public offer's subscription window will open on Monday, August 12, and close on Wednesday, August 14. The share allotment status is likely to be finalised on Friday, August 16. The company will initiate refunds for unsuccessful bidders on Monday, August 19, and transfer shares into the Demat accounts of the allottees the same day.

Saraswati Saree Depot shares will be listed on the NSE and BSE, the tentative listing date for the IPO is August 20.

Saraswati Saree Depot: Key financials and competitors

The company's revenue grew by over 1% to ₹612.58 crore in FY24 compared to ₹603.52 crore in FY23. The company’s profit-after-tax (PAT) increased over 28% to ₹29.53 crore in FY24 compared to ₹22.97 crore in FY23. The apparel maker’s net worth increased over 83% to ₹64.91 crore compared to ₹35.38 crore in FY23.

The company mentioned in its Draft Red Herring Prospectus (DRHP) that the apparel market is fiercely competitive. Some of the key competitors of Saraswati Saree Depot are Dindayal Jalan Textiles Private Limited, Dwarkadas Shamkumar Textiles Private Limited, Hoshiyar Singh Suresh Chandra Sarees Private Limited and Pune Textiles Market Private Limited.

Saraswati Saree Depot business model

Saraswati Saree Depot mentioned in its DRHP that while Indian apparel players employ various business models, two key differentiating factors are the strategy used in manufacturing or procurement of apparel, and the strategy used in selling it.

Saraswati Saree Depot’s primary business is in the wholesale (B2B) segment of sarees. Over 90% of the company's revenue comes from saree sales. The company also operates as a wholesaler of other women's apparel, such as kurtis, dress materials, blouse pieces, lehengas and bottoms.

The company regularly sources sarees and other women’s apparel from over 900 weavers and suppliers across different states across India. Currently, the company’s product catalogue has over 3,00,000 Stock Keeping Units (SKUs).

Here is a quick look at the Saraswati Saree Depot IPO's strengths and risks.

Strengths

• Diversified customer base.
• The vast and versatile product portfolio for women's apparel.
• The company has a diverse supplier base.
• The company can buy in bulk quantities, as its two stores have a total aggregate area of 185,121 sq feet.
• Strong and long-standing relationships with clients and suppliers.

Risks and threats

• Business is highly dependent on the sale of women's sarees. The business is concentrated in Maharashtra and is subject to risks such as local social unrest or breakdown of services, which can adversely affect it.
• The company operates in a highly competitive and unorganized market.
• Business is subject to seasonality.
• The business's high volume and low margin nature could substantially affect its net bottom lines if there is a sudden change in price movements or ad hoc anomalies.
• The company experienced negative cash flows from operating activities in FY22, financial activities in FY23, and investing activities in FY22 and FY23.

About Saraswati Saree Depot

Saraswati Saree Depot, incorporated in 1996, is engaged in the manufacturing and wholesale of women’s apparel and sarees. The company sells women’s apparel in southern and western states in India such as Maharashtra, Goa, Karnataka and Tamil Nadu. The company employed 314 workers as of June 30, 2024.

Saraswati Saree Depot plans to use the net proceeds from the public issue for funding working capital requirements of the company and for other general corporate purposes.