SP Apparels' IPO opens for subscription

IPO season is in full swing, and this time it is from garments manufacturer SP Apparels. SP Apparels has opened for subscription today i.e. Aug 2.  Company plans to raise Rs 239 crores of which Rs 215 crore will be a fresh issue and the remaining an offer-for-sale by New York Life Investment Management India Fund (FVCI)- Foreign Venture Capital Investor II. The price band is fixed at Rs 258-268 for an equity share of Rs 10 face value. The offer will close on Aug 4. On Aug 1, Dilip Buildcon has also invited for offer for subscription. It would be interesting to see how these two IPOs fare. However Dilip Buildcon has an upper hand comparably.

The company intends to use the fresh funds to repay debt, expand and modernise the manufacturing facility at Vazhapadi (Salem, Tamil Nadu), open new stores for the sales of its in-house ‘Crocodile’ brand and add balancing machineries for the existing dyeing unit at SIPCOT, Perundurai. Motilal Oswal Investment Advisors Pvt. Ltd., and Centrum Capital are the merchant bankers to the issue. 

For the year ended March 31, 2016, SP Apparels has reported a net profit of Rs 48.12 crore against Rs 25.49 crore a year ago. In the financial years 2011-12, 2012-13 and 2013-14, the company has reported net profit of Rs 6.82 crore, 5.22 crore and 12.56 crore, respectively. As of March 31, 2016, total debt of the company stood at Rs 259.36 crore comprising of long-term borrowings, short-term borrowings and current maturities of long-term borrowings.

Company is the leading manufacturer and exporter of knitted garments for infants and children in India. Company also manufactures menswear garments in India under the brand ‘Crocodile’.