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SKS Textiles NSE SME IPO review (May apply)

Review By Dilip Davda on Jan 4, 2018

SKS Textiles Ltd. (SKS) is an ISO 9000:2015 certified Company engaged in the business of Textile Manufacturing and Trading. It manufactures grey fabrics and finished fabrics for shirting, suiting, and other accessories for its own brand and also on outsourcing basis for other fabric / garment companies. Company has an installed capacity of 3,25,000 mtrs / month for manufacture of various fabrics from natural and man-made fibres specializing in 100% cotton, Giza, Supima, cotton blended fabrics, polyester viscose and polyester cotton. Our Company procures Yarn and processes it into Grey Fabric and further processes it into finished fabric as per the client’s requirement. SKS manufactures various fabrics like 100% Cotton – Lycra and Non-Lycra, Blended Cotton Suiting – Chief Value Cotton, Polyester Cotton, 100% Cotton Yarn Dyed , Polyester Viscose, Terry Rayon Suiting and Mock Linen under our brand names – Pierricarrlo, Cotbbelly’s and Earthen Belly. Company also undertakes corporate orders for Finished Fabrics and Grey Fabrics for corporate brands such as Raymond, Arvind, Siyaram’s, Digjam Limited, etc. Some of its manufactured products require certain processing like dyeing, value additions etc. which are outsourced to third parties and the finished goods from such third parties are directly sent to company’s Packing and Storage unit.

To part finance its working capital and general corpus fund needs, SKS is coming out with a maiden IPO of 888000 equity share of Rs. 10 each at a fixed price of Rs.150 per share to mobilize Rs. 13.32 crore. Issue comprises 438000 fresh equity issue and 450000 shares as offer for sale from existing stakeholders. Issue opens for subscription on 09.01.18 and will close on 11.01.18. Minimum application is to be made for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 27.24% of the post issue paid up capital of the company. Issue is solely lead managed by Aryaman Financial Services Ltd. and Sharex Dynamic (India) Pvt. Ltd. is the registrar to the issue. Average costs of acquisition of shares by the promoters are Rs. 4.21, Rs. 6.63, Rs. 33.51 and Rs. 42.36 per share. Having issued initial equity at par, it raised further equity in the price range of Rs. 30 to Rs. 200 per share during March 2004 to March 2014. It also issued bonus shares in the ratio of 7 shares for every 4 shares held in July 2017. Post issue, its current paid up capital of Rs. 2.82 cr. will stand enhanced to Rs. 3.26 cr.

On performance front, SKS has posted turnover/net profits of Rs. 120.43 cr. / Rs. 1.09 cr. (FY14), Rs. 131.76 cr. / Rs. 1.09 cr. (FY15), Rs. 147.82 cr. / Rs. 1.45 cr. (FY16) and Rs. 158.75 cr. / Rs. 1.61 cr. (FY17). For first half of the current fiscal, it has reported net profit of Rs. 1.12 cr. on a turnover of Rs. 75.16 cr. Thus it has shown higher net for first half and is a bit surprising. For last three fiscals it has posted an average EPS of Rs. 5.21 and an average RoNW of 5.13% on an equity base of Rs. 1.03 crore. Issue is priced at a P/BVof 1.38 on the basis of its NAV of Rs. 108.34 as on 30.09.17 and at a P/BV of 1.36 on the basis of its post issue NAV of Rs. 110.60.If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 21 against industry average of 28. Thus issue appears fully priced.

On merchant banker’s front, this is the 21st mandate from its stable. Out of last 10 listings, 3 opened at discount, 1 at par and the rest at a premium ranging from 0.2% to 20% on the day of listing.

Conclusion: Cash surplus investors may consider moderate investment in this fully priced offer for long term. (Other).


Conclusion / Investment Strategy

Cash surplus investors may consider moderate investment in this fully priced offer for long term. (Other).

Review By Dilip Davda on Jan 4, 2018

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 information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

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.

Email: dilip_davda@rediffmail.com

SKS Textiles IPO FAQs

  1. 1. Why SKS Textiles IPO?

    The initial public offer (IPO) of S K S Textiles Limited offers an early investment opportunity in S K S Textiles Limited. A stock market investor can buy SKS Textiles IPO shares by applying in IPO before S K S Textiles Limited shares get listed at the stock exchanges. An investor could invest in SKS Textiles IPO for short term listing gain or a long term.

  2. 2. How is SKS Textiles IPO?

    Read the SKS Textiles IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. SKS Textiles IPO what should investors do?

    SKS Textiles IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the SKS Textiles IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is SKS Textiles IPO good?

    Our recommendation for SKS Textiles IPO is to subscribe for long term.

  5. 5. Is SKS Textiles IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the SKS Textiles IPO.

  6. 6. When will SKS Textiles IPO allotment status?

    The SKS Textiles IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit SKS Textiles IPO allotment status to check.

  7. 7. When will SKS Textiles IPO list?

    The SKS Textiles IPO will list on Friday, January 19, 2018, at NSE SME.

1 Comments

1. M.L. Patel  Jan 11, 2018 12:13:44 PM
Sir,Which date SKS Textiles IPO listing on NSE <