HDFC Securities initiates coverage on Sai Silks with 'buy' rating, sees over 35% upside – key reasons
HDFC Securities, in its latest report, initiated coverage on Sai Silks (Kalamandir) with a 'buy' recommendation, setting a target price of ₹385 apiece. This target price implies an upside of 36% for the stock from its previous closing price of ₹285 apiece. Launched in FY05, Sai Silks (Kalamandir) Ltd (SSKL) is one of the largest apparel retailers in south India, offering products across ethnic wear (sarees) and value fashion.
It houses four popular brands—Kalamandir (KMR), Kancheepuram, Vara Mahalakshmi Silks (VML), Mandir (MDR), and KLM Fashion Mall (KLM)—straddling multiple price points. Also Read: Mamaearth shares jump 20% after Q2 results; Jefferies raises target on stock The brokerage has listed the following key factors for its bullish outlook in its report: A benefactor of unorganised to organised migration in sarees: Historically, the retail trade of sarees was dominated by unorganised players in small-format stores. SSKL, along with a few other organised retailers, continues to solve the need to consolidate the SKUs and variety on offer for consumers via large-format retailing, said the brokerage.
The saree market in south India is pegged at ₹262 billion. With a noteworthy market share of 5%, the brokerage foresees the company as a primary beneficiary of this value migration. Also Read: Primary market roars back as 3 of 4 IPOs sold out on Day One A strategic expansion model: The brokerage emphasised that the company has adopted a disciplined scaling strategy, focusing on a highly concentrated cluster-based expansion approach.
Despite the availability of over 150 south districts, SSKL strategically operates in just 12 districts, boasting a robust presence of 54 stores covering 6,03,414 sq. ft. as of March 2023.
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