Neelam Linens and Garments shares gained 66.87 percent on first day of listing on NSE SME

• 

• 

• 

• 

• 

Neelam Linens and Garments shares, a name synonymous with premium home fashion and garment manufacturing, had a great listing on November 18, 2024. The shares were quoted at Rs 40.05 at the opening on NSE SME aftewas r it listed at the same price. Starting the IPO price at ₹24, the share rose 66.87% to give a good boost to investor confidence in the stock. Neelam Linens managed to raise ₹13 crore through an IPO, which was subscribed 91.97 times. Retail and institutional investors showed intense interest in the issue. Let's dig deeper into the details of the IPO, the company's performance, and what this listing means for the market and investors.  

Key Highlights of the Neelam Linens and Garments IPO

1. Impressive Listing Performance

Neelam Linens' share oatd with Rs.40.05 at the NSwhichE has created a 66.87% premium over the issue price of Rs.24. an It is a very strong opening that shows the huge demand for the shares of the company in the market.

2. Number Oversubscribed

Thunder has opened for subscription from November 8 to 12, and it was tremendous as follows: Retail Investors: Subscribed 57.82 times. Non-Institutional Investors (NIIs): Subscribed a massive 273.47 times. Qualified Institutional Buyers (QIBs): Subscribed 15.40 times. A total of 33.16 crore shares were bid for against an offering of just 36 lakh shares, which indicates the level of interest that investors have in the issue.

3. About the Issue

Neelam Linens was purely a fresh issue of 54.18 lakh shares with no OFS component. Anchor investors showed their confidence by booking ₹3.69 crores from the company on November 7, abeforeor to the opening of the IPO.

• Price Band

The shares are available in a price band of ₹20-24 a share, which has made the IPO accessible to a wide range of investors.

• Minimum Investment

The minimum lot size for retail investors was 6,000 shares and a minimum investment of ₹1.44 lakh; hence, the bank attracted quite a few smaller investors who contributed to the extremely high subscription rates.

• Utilisation of Proceeds

The funds raised through the IPO will be used as follows:

• Capital Expenditure:

The purchase of high-technology embroidery machines to increase the output capacity.

• Debt Repayment:

Early or payback back of borrowed amounts.

• General Corporate Purposes:

For the advantages of the regular business operation or proposal to expand The proposed capital expenditure will help achieve better operating efficiency, establish new products, and place Neelam Linens on a growth trajectory.  

Views of Analysts Post IPO List

Some experts have remained a bit cautious over the financial and operational numbers of the company despite the good listing: Dilip Davda from Chittorgarh.com: Rated the issue as "avoid, mainly due to the pretty competitive and highly fragmented home furnishing space. He also raised a red flag over the stagnant financials of the company and its debt-equity of 3.12 as of June 30, 2024.

1. Valuations Brought into Question

Some analysts believe that the IPO is fully priced, with little upside based on FY25 super-annualized earnings. However, other investors, who consider this as high-risk and low-return investment, have mixed feelings over the scenario.

2. Company Overview: Neelam Linens and Garments

Established in the year 2010, Neelam Linens and Garments (India) Limited has grown to be one of the leading manufacturers involved in home fashion and garments production. Learn more about the company: Company Profile Neelam Linens Product Line Neelam Linens produces various high-quality soft home fashion items including Bedsheets Pillow covers Duvet covers Towels Rugs Garments, shirts many much more clothing items The company specializes in selling its products to discount retail houses. Neelam Linens sells high-thread-count bedding and towel products to distributors and retail hoinethe s of the USA and Australia.  

Other Activities of Neelam Linens and Garments

Apart from manufacturing, Neelam Linens is also engaged in trading import licenses. In this activity, it buys these licenses from exporters and then sells them to importers at a premium and generates surplus profit on margin differences.

1. Financial Performance

For the year ending March 31, 2024: Revenue: Drove down by 0.63% compared with the previous fiscal year. PAT: The PAT witnessed 3.43% growth and mentions the company's intent towards profit from revenue pressure. Operational Concern Despite profitability, analogous to inconsistent financial performance and a high debt level, major risks the company poses.

Particulars	Details
IPO Size	₹13 crore
Issue Type	100% Fresh Issue
Price Band	₹20-24 per share
Minimum Investment	₹1.44 lakh (6,000 shares)
Subscription Dates	November 8 - November 12, 2024
Listing Date	November 18, 2024
Lead Manager	Expert Global Consultants Private Limited
Registrar	Purva Sharegistry India Pvt Ltd
Market Maker	Globalworth Securities

2. Opportunities and Challenges

• International Market Presence:

The company has a huge international market presence in the USA and Australia. It is an opportunity for the company.

• Expansion Plan:

 Purchases of advanced embroidery machines in future will be uplifting the production capacities and capitalizing on increasing demand.

• Diversified Portfolio:

 The nature of its products allows Neelam Linens to respond to various needs of the customers.

• Potential Issues

3. Increasing Debt Levelsdebt-equityquity of raisesanye concernsncern over the health of the company.

• Competitive Industry:

 Neelam Linens functions in a fragmented market with significant competition with dominant players.

• Unchanged Financial Performance:

 A slip in revenue and uneven growth of profit is a symptom of stagnant operations

• Investor Perception and Industry Market

It is a healthy listing by Neelam Linens on the SME platform of the NSE, which reflects strong investor confidence, especially in the retail and non-institutional segments. The oversubscription rates as well as the listing premium reflect positive market sentiments although analysts did raise a few concerns. The company would grow its product portfolio, efficiency in operations, and concern debt to maintain investor confidence and grow over the long term.  

Conclusion

Neelam Linens and Garments's successful IPO and strong market debut point towards the company showing much promise in the competitive apparel and garment manufacturing for the home fashion segment. Impressive subscription rates and lipremiumsremium reflect a lot of confidence in the market. However, still valid cautioning factors are high debt levels and static financial performance. Neelam Linensthe, on one hand, also provides investment opportunities and risks for investors. High-risk appetite investors may find the growth prospects very appealing because of its expansion and worldwide market access plans. Conservative investors would be more attentive to the company's financial performance and operational efficiency before securing long-term investments. As Neelam Linens sets out on its journey as a listed entity, the fruits of its efforts would become directly proportional to success at marketplace challenges and consistent growth to be seen in the years ahead.