Sai Silks IPO: Everything you need to know

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Top Highlights

• Sai Silk's three-year average ROE and ROCE were 17.1 and 17.9 per cent, respectively

• annual revenue and net profit grew by 41.3 and 336 per cent, respectively, between FY21 and FY23

• stock will trade at a P/E and P/B of 34.9 and 3.4 times

• These figures are lower than its peers' median P/E and average P/B, respectively

• volatile commodity prices and ever-changing trends in fashion and consumer preferences can pose challenges for the business.

• Telangana and Andhra Pradesh, as the two states generated over 80 per cent of the company's revenue in FY23. Sai Silks

• sarees being its largest segment (68.3 per cent of revenue in FY23)

• As per the nature of the business, the company needs to maintain a high inventory level

• It leads to increased working capital requirements and may result in losses as inventory loses value, especially in the fashion business, over time.

• As per a report from Technopak

• women's apparel market will grow by around 21 per cent annually till 2027,

• Does the company have a credible moat? No,

• the company's promoters have pledged 16.9 per cent of their shares

• cash flow from operations was negative in FY21.

• net debt-to-equity ratio was 1.2 times in FY23.

• company has high working capital requirements

• cash conversion cycle stood at 125 days in FY23

• it finances its working capital through internal accruals and bank overdrafts

• contingent liabilities as a percentage of equity is 0.3 per cent.

• offer an operating earnings yield of 4.4 per cent on its enterprise value.