IPO Size: Rs. 170 cr, entirely Fresh Issue

• Rs. 112 cr for purchasing spinner Falcon Yarns
• Rs. 10 cr inter-corporate deposit to fund Falcon’s working capital

Price band: Rs. 125-136 per share

M cap: Rs. 600 cr, implying 28% dilution

IPO Date: Mon 29^th Jun to Wed 1^st Jul 2026, Listing Mon 6^th Jul 2026

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Gujarat-based Cotton Yarn Manufacturer

Aastha Spintex is a Morbi, Gujarat-based manufacturer of cotton yarn and bales. It produces 100% cotton yarns in counts, ranging from Ne 26 to Ne 40, which includes carded, combed and combed compact varieties.

IPO to fund Inorganic Growth

Issue proceeds will be used to part-fund purchase of smaller peer Falcon Yarns, a Rajkot based spinner having 9,757 MTPA spinning capacity, for Rs. 132 cr. Post acquisition, Aastha Spintex’s capacity will increase to 17,457 MTPA with ginning capacity unchanged at 12,000 MTPA.

Incoming Financials not as Strong

Aastha Spintex reported topline of Rs. 351 cr for FY25, with 14% EBITDA margin and 6% PAT margin. For 9MFY26, topline stood at Rs. 313 cr, with PAT of Rs. 18 cr, leading to 5.6% net margin.

On proforma basis, includng Falcon financials, 9MFY26 topline stood at Rs. 477 cr, but PAT was only at Rs. 21 cr, leading to a net margin of 4%. Proforma EPS for 9MFY26, on expanded equity, is at Rs. 6.3.

Company is paying Rs. 132 cr for acquiring Rs. 160 cr topline for 9MFY26. But Falcon’s EBITDA margin of 6% is half of Aastha’s 12%. Moreover, all the profits of Falcon come from other income, despite enjoying VAT concessions. Thus, a lot of operational efficiencies will be required to strengthen the profitability of the incoming business.

IPO Pricing

M cap of Rs. 600 cr implies a PE multiple of nearly 15x, on FY27E estimated PAT of about Rs. 40 cr, assuming operational efficiencies kick-in immediately. This makes the nano-cap textile stock fully valued, for the mid-single digit net margin and expected low double digit ROE. Aastha’s RoE, presently at 15%, may slip to about 9% post-acquisition. Even in the best case, with expansion in Falcon profitability, RoE may be 12% at the max.

Peer Ambika Cotton Mills, with 10% net margin on Rs. 800 cr topline, and a debt-free balance sheet, is ruling at a lower PE multiple of 13.8x, whereas Aastha will have about Rs. 100 cr debt on the books. Thus, pricing is not attractive for prospective investors.