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Sai Silks (Kalamandir) Ltd IPO Review (Avoid)

Review By Dilip Davda on February 4, 2013

After the first IPO of V Mart in first week of February 2013, we have yet another IPO in retail sector in second week of February. This time it is a south based company called Sai Silks (Kalamandir ) Ltd. (SSKL)

The company was started as a Partnership Firm under the name and style of 'Sai Silks' on August 10, 2005 with Mr. Chalavadi Naga Kanaka Durga Prasad and Ms. Chalavadi Jhansi Rani as partners. It was converted into a Private Limited Company in the year 2008 under the name and style of Sai Silks (Kalamandir) Private Limited and later on converted into a Public Limited Company and received fresh Certificate of Incorporation on May 21, 2009 from the ROC, Andhra Pradesh.

The company started with a retail outlet of 3500 sq. ft at Ameerpet-Hyderabad in 2005 aand currently has 15 outlets in southern region with a total of  1,29,035 Sq. ft. of area. SSKL is majorly in the business of retailing of sarees under the brand name of 'Kalamandir', 'Mandir' and 'Varamahalakshmi' and the entire range of sarees is in the price range of Rs. 300-350000.

In order to expand our products range, it also undertook display and sale of jewellery in its retail outlets under shop-in-shop model. SSKL has also entered into the business of generation of Electricity through Non-conventional energy sources by setting up a Wind Power Project with a capacity of 2 MW at Kondamedapally.

Company's product range includes Sarees, Women's dress materials, Men's wear, Kid's wear and Gold Jewellery & Silver Jewellery. It has chalked out a fund mobilization plan of Rs. 89 crore to set up 4 retail outlets, expenses for Brand Promotion and repayment of old debts with other corpus funds. For this, it is coming out with a book building route public issue of (*) equity share of Rs. 10 each with a price band of Rs. 70-75. Minimum application is to be made for 200 shares and in multiples thereof thereafter. Issue opens for subscription on 11.02.13 and will close on 13.02.13. Shares will be listed on BSE and NSE post issue. Issue is lead managed by Ashika Capital Ltd jointly with Vivro Financial Services Pvt. Ltd. and Bigshare Services Pvt. Ltd is acting as registrar to the issue. ICRA has assigned IPO Grade 2 to this issue indicating at 'Below Average Fundamentals' of the company.

On company's performance front, for last three fiscals it has posted an average EPS of Rs. 4.63 and for the first seven months of current fiscal it stands at Rs. 3.47 (not annualized). Its NAV stands at Rs. 26.61 as on 31.10.2012. It has not given any details of its peer and as such is not comparable with any listed entity. Considering offer price post issue capital can rise to around Rs. 32 crore and if we attribute current earnings, then its EPS for current fiscal stands at Rs. 3.76 and thus the asking price is at a P/E of around 20. This is the first IPO that offers 'safety net' to retail investors for buying back up to a maximum of 1000 shares from original eligible allottees only. Under this Scheme, if the market value of the equity shares falls below the Issue Price at any time during the Scheme Period, the providers will buy only original allotted equity shares of our Company at the issue price, This Scheme will remain open for a period of six (6) months from the date of credit of the Equity Shares in the Demat account of the Original Resident Retail Individual Allottees in this IPO.

Conclusion / Investment Strategy

As far as BRLM's mandate front is concerned, they have poor track record. While only 2 out of 8 IPOs gave listing gains from Ashika Capital, Vivro's only one IPO failed to perform on debut.

Considering this, despite "safety net" it is better to give it a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on February 4, 2013

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

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  4. 4. Is Sai Silks Kalamandir ipo good?

    Our recommendation for Sai Silks Kalamandir ipo is to avoid.

  5. 5. Is Sai Silks Kalamandir ipo worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Sai Silks Kalamandir ipo.

  6. 6. When will Sai Silks Kalamandir ipo allotment status?

    The Sai Silks Kalamandir ipo allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Sai Silks Kalamandir ipo allotment status to check.

  7. 7. When will Sai Silks Kalamandir ipo list?

    The Sai Silks Kalamandir ipo list date is not yet available. The Sai Silks Kalamandir ipo is planned to list on [.], at BSE, NSE.
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