Saraswati Saree Depot IPO: Strong Growth in Organized Saree Wholesale

SSDL IPO: Tapping into India’s Growing Premium Saree Market

BILKULONLINE

Ahmedabad, Aug 9: Saraswati Saree Depot Ltd. (SSDL) is a prominent player in the saree wholesale (B2B) segment. Established in 1966, the company specializes in the wholesale of sarees and other women’s apparel, including Kurtis, dress materials, blouse pieces, lehengas, and bottoms. SSDL generates over 90% of its revenue from saree sales and boasts a product catalog of more than 300,000 SKUs. In Fiscal 2024, the company served over 13,000 unique customers and recorded sales exceeding ₹600 crore.

SSDL’s Managing Director Vinod Dulhani, , Nikhil Dulhani, Head Investor  Relations and Prakash Kotecha from Unistone Capital pvt ltd were in Ahmedabad on Thursday to announce their IPO details before the media.

Key Highlights:

Established: 1966
Revenue (FY24): ₹612.58 crore
Unique Customers (FY24): 13,000+
Product Catalog: 300,000+ SKUs
Employees: 314
Major Operational Unit: Kolhapur, Maharashtra

Market Overview

The saree market in India is deeply rooted in cultural tradition and remains a staple in both casual and festive attire. The market is witnessing a shift towards premium products, driven by rising disposable incomes and changing consumer preferences. The saree industry is projected to grow at a CAGR of 5-6% from Fiscal 2024 to Fiscal 2029.

Market Trends:

Growth Drivers: Wedding and celebration wear, increasing demand for quality and branded products.
Market Structure: Dominated by small retail shops and unorganized players, with growing penetration by organized retailers targeting mid to premium segments.
Financial Performance
SSDL has demonstrated consistent growth in both top and bottom lines over the past three fiscals. The company has maintained a strong financial performance, with notable improvements in profit margins and return on capital employed (RoCE).

Financial Metrics:

Total Income (FY24): ₹612.58 crore
Net Profit (FY24): ₹29.53 crore
EPS (Average): ₹7.39
RoNW (Average): 60.92%
PAT Margins (FY22, FY23, FY24): 2.24%, 3.82%, 4.83%
RoCE (FY22, FY23, FY24): 169.07%, 98.03%, 64.46%
IPO Details
SSDL is launching its maiden IPO, comprising a fresh equity issue and an offer for sale (OFS). The issue aims to raise ₹160.02 crore at the upper price band, with the proceeds primarily allocated towards working capital and general corporate purposes.

Issue Highlights:

IPO Size: ₹160.02 crore
Price Band: ₹152 – ₹160 per equity share
Issue Opens: August 12, 2024
Issue Closes: August 14, 2024
Minimum Application: 90 shares
Listing: BSE and NSE
Post-IPO Paid-up Capital: ₹39.60 crore
Market Cap (Post-IPO): ₹633.60 crore
Allocation:
QIBs: Up to 50%
HNIs: At least 15%
Retail Investors: At least 35%
Use of Proceeds:
Working Capital: ₹81.00 crore
General Corporate Purposes: Remaining amount
Valuation and Investment Considerations
The IPO is fully priced based on FY24 earnings, with a P/E ratio of 21.45. The company’s consistent financial growth, unique business model, and extensive product catalog position it well for future expansion. However, the market is competitive, with significant presence from both organized and unorganized players.

Comparative Analysis:

Peers: Go Fashion, Sai Silks (Kalamandir)
P/E Ratios of Peers: 70.2, 24.0 (as of August 08, 2024)

SSDL’s unique business model in the organized saree wholesale market, combined with its robust financial performance, makes it an attractive investment for medium to long-term rewards. The company’s strategic focus on premium products and expansion into other women’s apparel segments further strengthens its market position. Investors looking for exposure in the ethnic wear segment may consider parking funds in SSDL’s IPO.

(Disclaimer: Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions)