Neelam Linens and Garments (India) Limited

Neelam Linens and Garments (India) Limited operates as a soft home furnishing company based out of Maharashtra, India, extending the services to a global clientele, including USA, Australia and Far East. They specialize in the processing, finishing and supplying of bedsheets, Pillow cover, Duvet Cover, Towels, Rugs, Doher, Shirts & Garments predominantly for discounted retail outlets. They source surplus or slightly imperfect fabric from the domestic market, applying value-added services such as designing, digital printing, dyeing, stitching, embroidery, and other enhancements. Subsequently, they distribute these refined products to discounted retail outlets in diverse countries. Company entered the apparel industry by starting an in-house production of men's and women's fashion apparel since 2023. Company also earns revenue from sale of import licenses. An import license is a governmental authorization required for the importation of goods that are not freely importable. The government primarily offers the licenses as a financial incentive to exporters, and once granted, they become commodities. Import licenses, which grant the holder the right to import goods that may be restricted or regulated, are considered a service when they are sold or transferred. Company operates two manufacturing units. Unit 1 & Unit 2 are located at Bhiwandi, Thane, Maharashtra. The Units are supported by infrastructure for storage of raw materials, manufacturing of the products, storage of finished goods, together with a quality control. The Unit 1 is engaged in cutting fabric and stitching whereas Unit 2 has checking department and packing department. As of June 30, 2024, company had an employee base of 56 employees. As per financial performance, Neelam Linens and Garments (India) Limited has posted total income / net profits of Rs 103.8 Cr / Rs 2.99 Cr (FY22), Rs 105.41 Cr / Rs 2.38 Cr (FY23), Rs 104.74 Cr / Rs 2.46 Cr (FY24) and Rs 21.95 Cr / Rs 0.8 Cr. So as per previous financials data, company has shown almost static results. Company has posted an average EPS of Rs 1.75 and average RoNW of 12.4% for last three fiscals. Issue is priced at a P/BV of 1.46 as per NAV of 16.41 as on 30.06.24. If we attribute latest earnings of FY23, FY24 and annualised FY25 on fully diluted equity post issue, then asking price is at a P/E of around 20.40, 19.72 and 15.08 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Expert Global Consultants Private Limited is associated with this SME IPO and handled 12 SME IPOs in last 3 years. From last 10 IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 IPOs, three are trading below issue price and remaining are trading above issue price as on today. ( As on 05.11.24 ) As per financials, Neelam Linens and Garments (India) Limited has shown almost static results, RoNW is 10.48% and P/E is respectively 20.40, 19.72 and 15.08 as per FY23, FY24 and annualized FY25 earnings. So, issue looks fully priced. Company is engaged in the business of Processing and trading of cloth products and sale of import licenses, which is highly competitive and fragmented business segment. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Kantilal Jethva
• 2 Bhavin Jethwa