Sai Silks Kalamandir IPO subscribed 4.40 times at close

The ₹1,201 crore IPO of Sai Silks (Kalamandir) Ltd, consisted of a combination of fresh issue and offer for sale. The fresh issue was to the tune of ₹600 crore while the offer for sale (OFS) was worth ₹601 crore. The IPO pricing was done in the band of ₹210 to ₹222 per share with the final price to be discovered through the process of book building. While the QIB portion picked up traction on the last day, the overall journey was quite slow. In fact, the QIB and HNI / NII portion got full subscribed only on the last day of the IPO as did the overall IPO. The retail portion remained undersubscribed as of the close of the IPO and will be reallocated to other categories. The table below captures the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 4.40 times subscribed at the close of the third and final day of the IPO on 22nd September 2023.

Rapid update on the overall IPO response

The IPO saw fairly tepid response on Day-1 and Day-2 of the IPO and closed with relatively modest subscription numbers at the close of Day-3. In fact, the company got fully subscribed only on the third and final day of the IPO, with the retail portion staying undersubscribed till the close of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, Sai Silks (Kalamandir) Ltd IPO was subscribed 4.40X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the retail segment in that order. In fact, the institutional segment saw some good traction on the last day. The HNI portion did do well with some funding applications and corporate applications coming in on the last day of the IPO. Retail portion was relatively timid and got less than 90% subscription in the IPO. Firstly, let us look at the details of overall allocation.

As of close of 22nd September 2023, out of the 384.86 lakh shares on offer in the IPO, Sai Silks (Kalamandir) Ltd saw bids for 1,694.59 lakh shares. This implies an overall subscription of 4.40X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors while the retail portion actually got less than one time subscription in the IPO. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. Both the QIB and the NII bids picked up some momentum on the last day. Here are the details of the category-wise subscription.

Subscription status of QIB Portion

On 18th September 2023, Sai Silks (Kalamandir) Ltd completed the bidding for its anchor allocation. There was a strong and robust response as the anchor investors participated through the process of book building. A total of 1,62,29,707 shares were allotted to a total of 26 anchor investors. The allocation was done at the upper IPO price band of ₹222 (including premium of ₹220 per share) which resulted in an overall allocation of ₹360.30 crore. The anchors absorbed 30% of the total issue size of ₹1,201 crore. Listed below are the 17 anchor investors who got allotted more than 2% each of the anchor shares in the IPO of Sai Silks (Kalamandir) Ltd. These 17 anchor investors listed below accounted for 89.86% of the total anchor allocation of Sai Silks (Kalamandir) Ltd; setting  the tone for retail participation in the IPO.

Data Source: BSE Filings

The QIB portion (net of anchor allocation as explained above) had a quota of 106.65 lakh shares of which it has got bids for 1,316.80 lakh shares at the close of Day-3, implying a subscription ratio of 12.35X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Sai Silks (Kalamandir) Ltd IPO subscription overall, the actual demand did turn to be quite modest for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 2.47X (getting applications for 206.25 lakh shares against the quota of 83.47 lakh shares). That is a relatively modest response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was not exactly visible as the overall HNI / NII portion saw meagre addition on the last day. Apart from the QIB portion, HNI portion also got subscribed on last day only.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 2.95X while the below ₹10 lakh bid category (S-HNIs) got subscribed 1.52X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 0.88 times; which means just 88% of the retail quota got subscribed at the close of Day-3, showing relatively tepid appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 194.75 lakh shares on offer, valid bids were received for only 171.53 lakh shares, which included bids for 140.74 lakh shares at the cut-off price. The IPO is priced in the band of (₹210 to ₹222) and has closed for subscription as of the close of Friday, 22nd September 2023.

Brief on the business model of Sai Silks (Kalamandir) Ltd

Sai Silks (Kalamandir) Ltd was incorporated in the year 2005 to provide an outlet that provides ethnic apparel and value-fashion products. While the basic inspiration for the offerings of Sai Silks (Kalamandir) Ltd is India’s rich ethnic diversity and its cultural history, it has also packaged its product offerings to have a solution for every possible occasion. Sai Silks (Kalamandir) Ltd currently offers a whole range of ultra-premium and premium sarees that are ideal for weddings, party wear and daily wear. In addition, Sai Silks (Kalamandir) Ltd also offers lehengas, men's ethnic wear, children's ethnic wear as well as semi-western wear with ethnic content for women, men, and children.

It sells its apparel products through 4 different format stores that constitute the front end for the company’s marketing. As of July 2023, Sai Silks (Kalamandir) Ltd has more than 54 stores in the 4 south Indian states of Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu. Its stores cover an aggregate area of approximately 603,414 square feet (SFT). The proceeds of the fresh issue portion will be used to fund capex for 25 new stores, setting up 2 warehouses, repayment of certain borrowings and for meeting working capital needs. The issue will be lead managed by Motilal Oswal Investment Advisors, HDFC Bank and Nuvama Wealth Management. Bigshare Services Private Ltd is the registrar to the issue.