Nandan Terry IPO : 7 things to know about
Nandan Terry Ltd, is a manufacturer of terry towels and towel products for the domestic and the export market. The company is based out of Ahmadabad in Gujarat and is a small sized company. The company is planning to raise funds purely through a fresh offer for shares to the public with no offer for sale (OFS) component.
1) Nandan Terry Ltd has already filed the draft red herring prospectus for a Rs.255 crore IPO with SEBI which comprises entirely of a fresh issue of Rs.255 crore. There will be no offer for sale component in the issue, so neither the existing promoters nor early investors are offering any of their shareholdings as part of the IPO.
The idea is to raise a small amount and get the stock listed so as to get a market driven valuation for the stock and eventually use stock as currency for future plans.
2) Since the issue will entirely be a fresh issue of shares, the entire Rs.255 crore, net of issue expenses will come into the company as part of the IPO proceeds. To that extent, the inflow will expand the capital base and will also be EPS dilutive. The fresh fund will be used for the purpose of repayment of debt, funding of working capital and for the general corporate purposes.
3) Nandan Terry may also explore the possibility of raising funds ahead of the issue via pre-IPO placement to gauge the market appetite and the likely valuations. In this case, the company plans to raise up to Rs.40 crore by way of pre-IPO placement with select institutions, HNIs and family offices.
If the pre-IPO placement is successful, then the IPO amount will be reduced to that extent and only the balance funds will be raised via the IPO route by Nandan Terry Ltd.
4) Nandan Terry Ltd is a recent entrant in the business and was incorporated only in the year 2015. Based out of Ahmedabad, Nandan Terry is a totally vertically integrated company that is engaged in the business of manufacturing terry towels and other towelling products.
In addition to manufacturing and marketing of terry towels and related products, the company also directly sells the cotton yarn that is manufactured at its units. This ensures better overall sales realizations for the company thus improving total revenues and also the profitability of operations.
5) Despite having been established only in the year 2015, Nandan Terry Ltd has already seen good traction in terms of sales numbers. If you consider the financial year 2021 i.e. the period ending March 2021, the net revenues stood at Rs.538.52 crore. This shows an improvement of nearly 25.42% over the figure of Rs.429.39 crore sales revenues that the company showed in the financial year ended March 2020.
This higher sales was achieved mainly on account of a spike in the sale of cotton yarn and towels and towelling products, as the economy saw a lot of revenge buying from customers.
6) Nandan Terry Ltd reported very nominal profits of just about Rs.1.22 crore in the financial year ended March 2020. However, for the financial year ended March 2021, the company reported net profits of Rs.23.38 crore. This translates into effective net margins of 4.34%, which is considered to be a fairly attractive margin for a predominantly retail business, which is normally a low net margin business.
7) The IPO of Nandan Terry Ltd will be lead managed by Holani Consultants and BOI Merchant Bankers (the merchant banking unit of Bank of India). They will act as the book running lead managers or BRLMs to the issue.
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