Neelam Linens and Garments is launching its IPO from November 8, 2024, to November 12, 2024. Here’s a comprehensive review of the Neelam Linens and Garments IPO to help you decide whether to apply.
Neelam Linens and Garments IPO Details
| IPO Date | November 8, 2024 – November 12, 2024 |
|---|---|
| Price Range | ₹20 – ₹24 per share |
| Lot Size | 6,000 shares |
| Minimum Investment | ₹144,000 |
| Total Issue Size | ₹13.00 Cr (5,418,000 shares) |
| Listing Date | November 18, 2024 |
| Listing Exchange | NSE SME |
Also See: IPO GMP
About Neelam Linens and Garments
Neelam Linens and Garments, based in Mumbai, is a manufacturer of soft home furnishings, including bedsheets, pillow covers, towels, and rugs. The company also ventured into apparel production in 2023, adding men’s and women’s fashion garments to its portfolio. With its focus on value addition through design and digital printing, Neelam Linens sources surplus fabric, enhancing it with dyeing, embroidery, and stitching before selling to discount retailers in the US, Australia, and the Far East.
Key Strengths:
- Cost Advantage: Neelam Linens leverages its ability to source surplus fabrics at competitive prices, adding value and selling at competitive rates.
- Diverse Export Market: The company’s strong presence in the US, Australia, and Far East markets provides a diversified revenue stream.
- Consistent Revenue Growth: Neelam Linens has shown an upward trend in revenue, growing from ₹78.20 Cr in FY21 to ₹103.56 Cr in FY23.
Key Risks:
- Product Concentration Risk: The company’s heavy reliance on bedsheets for exports could pose a risk if consumer preferences shift.
- Customer Concentration: A large portion of sales comes from a few buyers, increasing the risk if these buyers reduce orders.
- High Debt Levels: With a debt/equity ratio of 3.12, the company’s high borrowings could affect its financial stability.
Neelam Linens and Garments Financials (FY21 – FY23)
| Financial Metric | FY21 | FY22 | FY23 |
|---|---|---|---|
| Revenue (₹ Cr) | 78.20 | 102.00 | 103.56 |
| Total Assets (₹ Cr) | 64.68 | 78.60 | 99.85 |
| Profit (₹ Cr) | 0.42 | 2.99 | 2.38 |
Analysis:
The financial performance of Neelam Linens shows consistent revenue growth, but the profitability dipped slightly in FY23 due to rising costs and increased borrowings. The company’s profit margins are modest, with a PAT margin of 3.69%.
IPO Objectives
The proceeds from the IPO will be used for:
- Purchase of Embroidery Machines: To expand production capacity.
- Repayment of Borrowings: Reducing debt levels to improve financial stability.
- General Corporate Purposes: To support overall business operations and expansion.
Neelam Linens IPO Lot Size and Investment
| Investor Type | Lots | Shares | Amount (₹) |
|---|---|---|---|
| Retail (Min) | 1 | 6,000 | 144,000 |
| HNI (Min) | 2 | 12,000 | 288,000 |
Retail investors can bid for a minimum of 6,000 shares, equivalent to ₹144,000, while HNIs can apply for at least 12,000 shares.
Neelam Linens IPO Promoter Holding
| Category | Pre-Issue | Post-Issue |
|---|---|---|
| Promoters | 74.18% | 54.29% |
Key Performance Indicators
| KPI | Values |
|---|---|
| ROE | 2.99% |
| ROCE | 3.84% |
| Debt/Equity | 3.12 |
| PAT Margin (%) | 3.69% |
| P/BV | 1.46 |
These indicators show moderate financial performance, with a high debt ratio being a key concern.
Pros and Cons of Neelam Linens and Garments IPO
Pros:
- Growing Revenue: The company has shown a consistent increase in revenue, indicating strong demand for its products.
- Expansion into Apparel: The recent addition of men’s and women’s fashion apparel could open new revenue streams.
- Export Market Presence: Access to international markets, including the US and Australia, diversifies revenue and reduces dependency on the Indian market.
Cons:
- High Debt Levels: The company’s high debt burden could affect profitability and cash flow.
- Dependence on Few Buyers: Significant sales from a limited customer base pose a concentration risk.
- Legal Proceedings: Ongoing legal cases could potentially impact business operations and investor sentiment.
Should You Invest in Neelam Linens and Garments IPO?
While Neelam Linens has a growing revenue base and a diversified product line, several red flags should be considered:
- High Debt Levels: The company’s debt-equity ratio is a concern, indicating high financial leverage, which may strain profitability.
- Narrow Export Focus: Heavy reliance on bedsheet exports could expose the company to market demand shifts and fluctuations in international markets.
- Inconsistent Profits: Despite revenue growth, profit margins remain thin and have fluctuated in recent years.
Analyst Recommendation:
- Dilip Davda’s Review: “Avoid.” The issue appears to be fully priced based on FY25 earnings, and the high-risk nature of the business model suggests caution for retail investors.
How to Apply for Neelam Linens and Garments IPO
You can apply via ASBA through your net banking account or through UPI using trading apps like Zerodha, Upstox, or Paytm Money.
- Login to Net Banking or Trading App
- Select IPO Option
- Enter Bid Details (Price range: ₹20 – ₹24)
- Approve UPI Mandate
Conclusion
Neelam Linens and Garments IPO presents an opportunity to invest in a niche player within the textile industry, leveraging its cost advantages and export capabilities. However, the high debt levels and risks associated with customer concentration should be carefully considered.
Registrar:
Purva Sharegistry India Pvt Ltd
Contact Registrar for Queries
The final decision should align with your investment goals and risk appetite.
FAQs
What are the IPO dates for Neelam Linens and Garments?
The IPO will open on November 8, 2024, and close on November 12, 2024.
What is the price range for Neelam Linens and Garments IPO?
The price band is set between ₹20 and ₹24 per share.
What is the lot size for Neelam Linens IPO?
The minimum lot size is 6,000 shares.
What is the minimum investment required for retail investors?
The minimum investment is ₹144,000 for one lot (6,000 shares).
Where will Neelam Linens IPO be listed?
The shares will be listed on the NSE SME platform.
What are the objectives of Neelam Linens IPO?
The IPO proceeds will be used for purchasing embroidery machines, repaying borrowings, and general corporate purposes.
Who are the promoters of Neelam Linens and Garments?
The promoters are Kantilal Jethva and Bhavin Jethwa.
How can I apply for Neelam Linens and Garments IPO?
You can apply via ASBA through net banking or UPI using trading apps like Zerodha, Upstox, or Paytm Money.
What is the expected market capitalization of Neelam Linens after the IPO?
The market capitalization is expected to be around ₹48.52 Cr.
What is the allotment date for Neelam Linens and Garments IPO?
The allotment date is likely to be on November 15, 2024.
What is the refund date for Neelam Linens IPO?
Refunds will be initiated on November 16, 2024.
When will Neelam Linens IPO shares be credited to the demat account?
The shares will be credited on November 18, 2024.
What is the face value of each Neelam Linens share?
The face value is ₹10 per share.
What is the total issue size of Neelam Linens and Garments IPO?
The total issue size is ₹13.00 Cr, comprising 5,418,000 shares.
Is Neelam Linens and Garments a good investment?
It depends on your risk appetite. The company has shown revenue growth but also has high debt levels. Analyze the financials before deciding.
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