Sai Silk (Kalamandir) shares extend gains after mild listing pop; should you hold the stock or book profit?

Shares of Sai Silk (Kalamandir) saw some buying after a tepid debut at Dalal Street on Wednesday. However, the buying during its maiden trading session was limited but was enough to push the stock higher, extending its overall gains to double digits over IPO's issue price.

Shares of Sai Silk (Kalamandir) were listed at the bourses at Rs 231, with a premium of 4 per cent, compared to its issue price of Rs 222 per share on the National Stock Exchange (NSE).  The ethnic apparel firm debuted at a similar premium at Rs 230.10 on BSE.

However, the stock jumped another 6 per cent to Rs 243.85 as the session progressed, extending gains to 10 per cent from the given issue price. However, the stock was hovering around Rs 242-levels as of 1.15 pm on Wednesday. Analysts tracking the stock are positive on the issue in the long-run, but suggest investors take some profit off the table.

Sai Silk made its debut on the stock exchanges at a premium of 4 per cent. In the long term, the company has the potential to grow its business, given its strong brand presence, expanding footprint, and focus on online sales, said Shivani Nyati, Head of Wealth at Swastika Investmart.

"However, investors should be aware of the risks associated with the company, such as the competitive nature of the industry and the impact of economic downturns on consumer spending. Thus, cautious investors may consider exiting their position, but investors with a long-term view may hold it by keeping a stop loss," she advised.

Sai Silks (Kalamandir) is among the leading ethnic and value-fashion retail companies in south India. On the Debut the IPO surged about 10 per cent, said Mahesh M. Ojha, AVP – Research at Hensex Securities.

"Considering the company’s scalable model positioned to leverage growth, Strong presence in offline and online marketplace with an omni-channel network, Track record of growth, profitability, and unit economics with an efficient operating model. We suggest investors to Book at least 50% Profits on the listing day itself, rest can be kept for Long term investment perspective," he added.

Sai Silk (Kalamandir) offered its shares in the price band of Rs 210-222 per share, with a lot size of 67 shares. The Rs 1,201 crore issue was open for bidding between September 20-22 and was overall subscribed 4.47 times during the three-day bidding process.

Sai Silks intends to continue its cluster-based expansion model and increase its presence across southern India in order to ensure better operational control over its stores. For a capital-intensive business, it has maintained an impressive asset turnover ratio of 1.1 times, said Anushi Vakharia, Research Analyst at StoxBox.

"The company embarks on a massive expansion. The company also has a high return on equity of around 28 per cent which is likely to sustain the stock at high valuations. We, therefore, remain positive on the company and recommend investors to hold the stock from a medium to long term perspective," she added.

Sai Silks provides ethnic apparel and value-fashion products, including premium and ultra-premium sarees. It is majorly focused in the Southern states of India including Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu. The company provides fashion products suitable for weddings, parties, and other occasions. It got listed in its second attempt.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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