On Monday, November 18, shares of Neelam Linens and Garments made a respectable market debut when they went public on the NSE SME at ₹40.05, 66.87 per cent higher than the issue price of ₹24.
The ₹13 crore SME IPO of Neelam Linens was available for subscription between November 8 and November 12. The issue price of the health insurance services provider’s shares was between ₹20 and ₹24 per share.
After three days of bidding, Neelam Linens’ initial public offering (IPO) closed with strong demand, receiving 91.97 times bids. Out of the 36 lakh shares available, 33.16 crore shares were bid on during the IPO. The non-institutional investor (NII) group was bid 273.47 times, while the retail investor sector was booked 57.82 times. 15.40 subscriptions were made to the section for qualified institutional purchasers.
The full 54.18 lakh shares issued by Neelam Linens were new issues. There was no element of an offer for sale. On November 7, 2024, the company raised ₹3.69 crore from anchor investors.
With a minimum lot size of 6,000 shares and a minimum investment of ₹1.44 lakh, retail investors were eligible to apply. The proceeds of the issue will be used for the following purposes: Prepayment or repayment of all or a portion of certain outstanding borrowings obtained by the company; General corporate purpose; Funding capital expenditure requirement of our company towards the purchase of embroidery machines for expansion.
A maximum of 20% of the net offer is set aside for qualified institutional bidders (QIBs). Retail investors will receive up to 34% of the net offer, while non-institutional investors (NIIs) will receive up to 15%.
Purva Sharegistry India Pvt Ltd is the issue’s registrar, while Expert Global Consultants Private Limited is the book-running lead manager of the Neelam Linens and Garments IPO. Globalworth Securities is the market maker for the Neelam Linens and Garments IPO.
“The company is engaged in a highly competitive and fragmented processing and trading segment in home furnishings and related services. It is also dealing in the sale of import licenses. The company posted static but inconsistent financial performances so far. Its debt-equity ratio of 3.12 as of June 30, 2024, raises major concerns. Based on FY25 super annualized earnings, the issue appears fully priced. There is no harm in skipping this “High Risk/Low Return” offer, said Dilip Davda of Chittorgarh.com with an ‘avoid’ rating.
About Neelam Linens and Garments
Neelam Linens and Garments (India) Limited was established in 2010 to produce and distribute high-end soft home fashion items all over the world. The company’s wide range of products, which mostly serves discount retail establishments, includes bed linens, pillowcases, duvet covers, towels, carpets, shirts, and other clothing. It provides bedding and towel items with a high thread count to retailers and distributors in countries including the USA and Australia. To profit from pricing discrepancies, Neelam Linens also trades licenses, buying from exporters and selling to importers.
The company’s sales decreased by 0.63% for the fiscal year that ended on March 31, 2024, but its profit after tax (PAT) rose by 3.43% over the prior fiscal year.
