IPO Size: Rs. 145 cr, Entirely Fresh issue  

• For greenfield capex (Rs. 71 cr) and working capital (Rs. 27 cr)

Price band: Rs. 205-216 per share

M cap: Rs. 576 cr, implying 25% dilution

IPO Date: Tue 20^th May to Thu 22^nd May 2025, Listing Tue 27^th May 2025

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

Surat, Gujarat-Based Grey Fabric Manufacturer

Borana Weaves is a 25 year old manufacturer of unbleached synthetic grey fabric, used in fashion, traditional textiles, technical textiles, home decor and interior designing. Company’s manufacturing capacity for grey fabric and polyester textured yarn (PTY) is nearly 23 cr meter per annum, which is over 80% utilized, at present.

Sizeable Capex from IPO Proceeds

It plans 11.3 cr annual capacity greenfield plant, to increase capacity by 49% by FY26-end. This capex of Rs. 71 cr will be entirely funded through IPO proceeds, leading to heathy growth visibility FY27E onwards. Balance IPO funds of Rs. 27 cr will meet working capital requirements of the new capacity.

High Margin Business

Company has invested in state-of-the-art textile manufacturing technology, like high-tech water jet looms, which has increased production efficiency, lowered labour dependence and led to healthy margins.

On FY24 revenue of Rs. 199 cr, PAT was at Rs. 24 cr, translating into a net margin of 12%. 9MFY25 revenue rose to Rs. 212 cr with PAT of Rs. 29 cr, resulting in a net margin of 13.8%. Even if other income and exceptional gain of Rs. 4-5 cr is excluded, 9MFY25 net margin is healthy at ~12%. EPS stood at Rs. 12 and Rs. 15 for FY24 and 9MFY25 respectively. Company boasts of 50% RoE, which after the capex, will be be north of 20%, FY27E onwards.

Inexpensive Pricing

FY25E EPS of Rs. 18, leads to a PE multiple of only 12x, on a historical basis. This is inexpensive for historic growth, industry-leading double-digit margins, as well as in relation to peers. Integrated textile major KPR Mills, with Rs 6,400 cr topline and 12% net margin, has a PE multiple of 50x, while Vardhman Textiles, with Rs. 10,000 cr topline and 9% net margin, is ruling at a PE multiple of 16x. Thus, Borana can very well witness PE expansion post listing.