Sai Silks (Kalamandir) IPO Review
Sai Silks (Kalamandir) IPO Subscription Status as on 13/2/2013
Overall 87 % Issue Subscription
QIB (Qualified Institutional Investors ): 0 Subscription
NII (Non Institutional Investors): 43 % Subscription
RII (Retail Institutional Investors):1.31 times Subscription
Sai Silks (Kalamandir) IPO Subscription Status as on 12/2/2013
Overall 60% Issue Subscription
QIB (Qualified Institutional Investors ):0 Subscription
NII (Non Institutional Investors): 1% Subscription
RII (Retail Institutional Investors):1.08 times Subscription
Sai Silks (Kalamandir) IPO Subscription Status as on 11/2/2013
Overall 32 % Issue Subscription
QIB (Qualified Institutional Investors ):0 Subscription
NII (Non Institutional Investors): 0 Subscription
RII (Retail Institutional Investors):91 % Subscription
IPO ANALYSIS : SAI SILKS, FAIR VALUE RS 20.
ReplyDeleteMATTERS OF CONCERN / RISKS:
1. Unprofessionally managed company.
2. The promoters face FEMA violation cases.
3. Statutory dues including gratuity liability and income tax arrears amounting to Rs 150lacs is has not been remitted by the company.
4. Over 90 per cent purchase are made from group companies.
5. The company has negative cash flows from its operating activity, investing activity and financing activity for the financial year 2007-08 to 2011-12 and for the period ended October 31, 2012.
6. Related party transactions for a net aggregate amount of Rs 14594.99 lakhs for the period ended October 31, 2012.
7. Company’s Trade Receivables, Trade Payables and Loans & Advances are subject to confirmation and reconciliation.
8. This is the second attempt by the company. Its maiden attempt in 2009 failed.
9. Group companies involved in similar business, clash of interest.
10. Kalamandir and other trade mark not registered.
11. Limited geographical presence with stores located in Bangalore and Hyderabad accounts for 90 per cent.
12. Working capital intensive industry. Change in fashion and taste of consumer may lead to huge unsalable inventory pile up.
13. Pathetic track record of BRLM.
14. Company has entered into un related business and definite loss business activity -Wind Power, where it has already sunk Rs 11Cr.
15. Out of the Rs 89Cr of IPO money, Rs 59Cr will go for working capital, Rs 1Cr for repayment, Rs 8.50Cr for brand promotion and only Rs 12.73Cr for setting up of new stores. The impact of IPO funds in shoring up the top and bottom line in the coming years is minimal.
VALUATION AND RECOMMENDATIONS
The company post IPO will have equity around Rs 22.50Cr. For the FY14, at best the company may report an EPS of Rs 4.50. This category of companies’ shares should not be trading beyond 5 PE multiples. Hence the fair value of the share is around Rs 20. Avoid subscription. Do not be misled by the “safety net “offered by the company /BRLM.