Neelam Linens & Garments IPO Opens Nov 8: Key Opportunity in Home Textiles

Neelam Linens and Garments (India) Ltd, a prominent player in India’s soft furnishings and apparel market, is opening its Initial Public Offering (IPO) from 8th November to 12th November 2024. This IPO seeks to raise ₹13 crore entirely through a fresh issue of 54.18 lakh shares, with a price band of ₹20 to ₹24 per share. The minimum investment size for retail investors is ₹144,000, with 6,000 shares per lot. With the tentative listing on NSE SME scheduled for 18th November 2024, Neelam Linens and Garments IPO provides a notable opportunity for investors in India’s fast-growing home textiles and apparel industry.

Founded in September 2010, Neelam Linens and Garments (India) Ltd has steadily grown its foothold in the soft furnishings and apparel sectors. The company’s product range includes bedsheets, pillow covers, duvet covers, towels, rugs, and various garments. Serving both domestic and international customers, Neelam Linens has established a client network that includes prominent retail names such as Vijay Sales, Amazon, and Meesho in India, and TJX, U.S. Polo Assn, Big Lots, and Ocean State Job Lot internationally. The company operates two manufacturing units in Bhiwandi, Thane, Maharashtra, currently producing 4,000 units daily, with a capacity to scale up to 6,000 units. This expansion aligns with its strategy to meet increasing demand in the soft furnishings market.

Key IPO Details

• IPO Open Date: 8th November 2024
• IPO Close Date: 12th November 2024
• Price Band: ₹20 – ₹24 per share
• Minimum Investment: 6,000 shares (₹144,000 for retail investors)
• Total Issue Size: ₹13 crore (54.18 lakh shares)
• Fresh Issue: Entirely fresh issue, no Offer for Sale
• Listing Date: 18th November 2024
• Market Maker Portion: 2.76 lakh shares
• Lead Manager: Expert Global Consultants Private Limited
• Registrar: Purva Sharegistry India Pvt Ltd

Why should you consider investing Neelam Linens and Garments IPO?

• Growing Market Demand for Affordable Home Furnishings: India’s soft furnishings and textile markets are projected to grow at an annual rate of around 12%, driven by rising urbanization and consumer spending on quality yet affordable home textiles. Neelam Linens caters to this demand through direct retail channels and digital platforms, ensuring it meets the cost and quality expectations of a broader customer base.
• End-to-End Operational Capabilities: The company’s in-house facilities and skilled workforce of 58 employees provide Neelam Linens with an advantage in controlling quality and efficiency across the supply chain. The two manufacturing units in Bhiwandi produce 4,000 units daily, with the potential to increase to 6,000, supporting the company’s strategy to scale production for higher volumes and reach.
• Strategic Client Portfolio: By partnering with well-established retail brands domestically and internationally, Neelam Linens maintains a reliable and diversified revenue stream. Contracts with clients such as TJX, Big Lots, and U.S. Polo Assn provide access to consistent orders and enhance the company's visibility in both value and premium markets.
• IPO Funds for Strategic Expansion: Proceeds from the IPO are earmarked for capital expenditure, specifically the purchase of advanced embroidery machines. This investment will enable the company to expand its product offerings and strengthen its manufacturing capacity to meet growing demand. In addition, a portion of the funds will be directed toward debt repayment, which will lower financial liabilities and improve cash flow.

Financial Highlights

Neelam Linens’ financial metrics highlight steady growth, with rising revenue, an expanding asset base, and a strong net worth. Below are the key financial figures:

Market Position and Growth Prospects

India’s textile and soft furnishings market is witnessing steady growth due to increasing demand for affordable, quality-driven products. With the government’s push for the textile sector through incentives like the Production Linked Incentive (PLI) scheme, Neelam Linens stands to benefit from an expanded infrastructure and support for domestic manufacturers. The company’s positioning as a low-cost supplier with a range of products caters well to value-driven customers and supports its growth strategy in both Indian and international markets.

Furthermore, the international market presents additional opportunities, as the company’s long-standing partnerships with global retail brands enable access to a large export market. Expanding production capacity to 6,000 units per day will allow Neelam Linens to meet this demand efficiently, furthering its commitment to growth in diverse geographic markets.

Key Strengths and Competitive Advantages

• Direct Sales Model and Diverse Distribution Channels: By selling directly to retail customers through e-commerce and brick-and-mortar channels, Neelam Linens maximizes its reach and maintains control over its profit margins. This strategy enables the company to respond quickly to consumer trends and product demand, particularly in high-volume sales platforms like Amazon and Meesho.
• Efficient Financial Management and Cost Control: The company focuses on operational efficiencies, which has allowed it to optimize resource allocation and reduce costs. The resulting cost savings support profitability, evidenced by a PAT increase of over 472% from FY21 to FY23.
• Product Portfolio Expansion: With the IPO proceeds, Neelam Linens aims to introduce more value-added products such as embroidered linens and fashion garments. The company’s diversified portfolio also includes essentials like bedsheets, towels, and garments, catering to a broad range of consumer needs and helping it maintain a resilient position even during market downturns.
• Experienced Leadership and Skilled Workforce: Led by promoters Kantilal Jethva and Bhavin Jethwa, Neelam Linens benefits from seasoned leadership in the textile and manufacturing space. The company employs 58 individuals, eight on payroll and 50 daily wage earners, who contribute to efficient production and quality control.

Conclusion

Neelam Linens and Garments’ IPO offers a promising investment opportunity in India’s expanding soft furnishings and apparel market. With a strong focus on operational efficiency, a diverse client portfolio, and a clear path for capacity expansion, the company is well-prepared to meet growing demand domestically and internationally. Neelam Linens' ability to leverage direct sales channels, combined with its focus on enhancing product offerings, presents investors with a solid value proposition. This IPO offers a valuable entry point for investors looking for long-term growth potential in a well-established company within the SME segment of NSE.