Neelam Linen’s lists at ₹40.05, a stellar IPO debut

Neelam Linens and Garments shares saw a promising debut on November 18, listing at ₹40.05 on the NSE SME platform. This represents a 66.87% premium over its issue price of ₹24. The company’s IPO has sparked significant interest among investors keen to invest in IPO opportunities.

IPO subscription sees an overwhelming response

Neelam Linens’ SME initial public offering, valued at ₹13 crore, was open for subscription from November 8 to November 12. Shares were priced between ₹20-24 per share, and the IPO closed with an impressive 91.97 times oversubscription. 

Key subscription details include:

• Retail investors: 57.82 times subscription
• Non-institutional investors (NII): 273.47 times subscription
• Qualified institutional buyers (QIBs): 15.40 times subscription

The IPO was a fresh issue of 54.18 lakh shares, with no offer for sale (OFS) component.

Allocation and utilisation of funds

The proceeds of the IPO will be used for:

• Expanding operations through the purchase of embroidery machines
• Repayment or prepayment of certain borrowings
• General corporate purposes

Of the net offer, 20% was reserved for QIBs, 15% for NIIs, and 34% for retail investors. The minimum application size required retail investors to bid for at least 6,000 shares, amounting to ₹1.44 lakh.

Financial performance and industry outlook

Neelam Linens operates in a competitive home furnishings and garments segment. The company reported its revenue for the fiscal year concluding on March 31, 2024, dipped by 0.63%, but profit after tax (PAT) rose by 3.43%. Its debt-to-equity ratio of 3.12 as of June 30, 2024, raises concerns among industry analysts. Many consider the IPO a high-risk, low-return investment, advising investors to evaluate their decisions carefully.

About Neelam Linens and Garments

Established in 2010, Neelam Linens specialises in manufacturing and exporting home fashion products, including bedsheets, towels, rugs, and garments. Its key markets include the USA and Australia, where it caters to discount retail outlets. The company also engages in trading import licences, capitalising on price differences for profit.

Key takeaways

• Neelam Linens IPO made a 66.87% premium debut on NSE SME.
• Oversubscribed 91.97 times, reflecting robust investor demand.
• Proceeds to fund expansion, debt repayment, and corporate needs.
• Analysts urge caution due to financial concerns and market risks.

Neelam Linens’ IPO highlights the growing interest in SME listings, offering opportunities for those seeking to invest strategically in IPO markets.