- Our view
- May Subscribe
- Market cap then
- ~INR 575.54 Cr.
- Price band
- INR 205 to 216 per share
Borana Weaves manufactures polyester textured yarn and unbleached synthetic grey fabric at its facilities in Surat, Gujarat. Minerva Capital Research Solutions recommends May Subscribe to the IPO, citing the company’s manufacturing capabilities, experienced promoter and location, while noting the product’s commoditized nature and the importance of the planned Unit 4 expansion to future growth.
About Borana Weaves
Incorporated in Oct’20, Borana Weaves manufactures polyester textured yarn (PTY Yarn) and unbleached synthetic grey fabric at three manufacturing units in Surat, Gujarat. Its equipment includes 15 texturizing machines, 6 warping machines, 700 water jet looms and 10 folding machines. Current installed capacity is 2,332.80 lakh meters per annum; the proposed Unit 4 expansion would add 1,127.52 lakh meters per annum. Capacity utilization was 79.62% in 9MFY25.
Borana Weaves IPO Details
| Particulars | Details |
|---|---|
| Price Band (INR) | 205 to 216 |
| Face Value (INR) | 10 |
| Implied M.Cap (INR Cr.) | 575.54 |
| Exchange | BSE, NSE |
| Minimum Lot Size (Retail | HNI) | 69 | 966 |
| Issue Opens on | 20-May-2025 |
| Issue Closes on | 22-May-2025 |
| Listing Date | 27-May-2025 |
| Fresh Issue of Shares (#) | 67,08,000 |
| Offer for Sale (#) | 0 |
| Funds Mobilized: Fresh Issue of Shares (INR Cr.) | 144.89 |
| Funds Mobilized: Offer for Sale (INR Cr.) | 0.00 |
Use of IPO Proceeds
- New manufacturing unit: INR 71.35 Cr. for capex to produce grey fabric.
- Working capital: INR 26.50 Cr.
- Other purposes: The issue also includes funding of GCP and issue-related expenses; the amount for GCP is unreadable in the report.
Strengths
- Location near customers and suppliers: In 9MFY25, 98% of revenue came from customers located in Gujarat, and 90% of suppliers were in Gujarat. Grey fabric is used for further processing in areas including fashion, technical textiles, home décor, interior design and traditional textiles.
- Water jet loom manufacturing: The company operates 700 water jet looms. The report cites higher operating speeds, reduced downtime and lower energy consumption, with the equipment used to produce uniform textured fabric and consistent quality.
- Experienced promoter: Promoter and Chairman & Managing Director Mangilal Ambalal Borana has over 24 years of experience in the textiles industry. Group companies include R&B Denims Ltd., Borana Filaments Pvt. Ltd., Ricon Textile Pvt. Ltd. and Arham Weaves Pvt. Ltd.
- Capacity expansion: Unit 4 is proposed to add 1,127.52 lakh meters per annum of capacity, including 348 water jet looms. The report expects production to begin in Dec’25.
Borana Weaves Key Financials
| Particulars | FY22 | FY23 | FY24 | 9M-FY25 |
|---|---|---|---|---|
| Revenue | 42 | 135 | 199 | 212 |
| Growth Rate Y-o-Y % | 220% | 47% | ||
| Gross Margin % | 28.0% | 36.3% | 38.5% | 39.1% |
| EBITDA % | 12.2% | 19.2% | 20.7% | 21.8% |
| PAT % | 4.2% | 12.0% | 11.8% | 13.6% |
| Debt (Short+Long) | 28 | 41 | 71 | 56 |
| Equity | 2 | 24 | 48 | 77 |
| Debt/Equity | 15.37x | 1.69x | 1.48x | 0.72x |
| ROE % | 99.4% | 67.6% | 49.5% | 38.2% |
| ROCE % | 12.0% | 33.9% | 27.0% | 27.3% |
| CFO / EBITDA % | -ve | 26% | 54% | 56% |
Revenue increased from 42 in FY22 to 199 in FY24. In 9M-FY25, revenue was 212 and the reported EBITDA % and PAT % were 21.8% and 13.6%, respectively.
Business and Growth
The company produces PTY Yarn and grey fabric through texturizing, warping, drawing and water jet weaving, followed by folding and quality checks. Grey fabric represented 84.2% of operating revenue in 9M-FY25, compared with 72.2% in FY24.
- Existing units: The report estimates potential annual topline of ~INR 290 Cr. at peak utilization of all three existing units, translating into annualized PAT of ~INR 40 Cr.
- Unit 4: At peak capacity, Unit 4 is estimated to have potential topline of ~INR 120 Cr. Its contribution in FY26 is expected to be lower because it will be operational in H2.
- Listed peers: The company has indicated that there are no listed peers in this product profile.
Shareholding
| Particulars | Pre-Issue | Post-Issue |
|---|---|---|
| Promoter & Promoter Group | 87.19% | 65.24% |
| Public & Others | 12.81% | 34.76% |
| Total | 100.00% | 100.00% |
IPO Valuation and Our View
At the IPO price band of INR 205 to 216 per share, the issue is valued at P/E ratios of 24.4x and 14.7x based on FY24 and FY25 (annualized 9M-FY25) PAT, respectively. The report weighs the promoter’s experience, manufacturing capabilities and location against the commoditized product, related-party transactions and dependence on Unit 4 to drive sales growth. Minerva Capital Research Solutions recommends May Subscribe.
- INR 205 to 216 per share
- IPO price band
- ~INR 575.54 Cr.
- Implied market capitalization
- May Subscribe
- Recommendation
Key Risks
- Unit 4 commencement: Production from Unit 4 is expected in Dec’25. The report notes that any additional topline growth will come from Unit 4, as FY25 sales are expected to be driven by peak utilization of existing units.
- Related-party sales: Related-party sales accounted for ~14% of revenue in 9M-FY25, compared with 26% in FY24, 35% in FY23 and 51% in FY22.
- Contingent liabilities: Outstanding bank guarantees issued for group company Ricon Textile Pvt. Ltd. amount to INR 9.82 Cr.
- Product profile: The report cites the commoditized nature of the product as a factor offsetting the company’s strengths.
Our View
Borana Weaves combines an experienced promoter, manufacturing capabilities and a Surat location with a planned capacity expansion funded in part by IPO proceeds. The report’s May Subscribe recommendation is tempered by product commoditization, related-party sales and the reliance on Unit 4 for further growth.
Standard disclosures
- Research Analyst has served as an officer, director or employee of subject company(ies): No
- We or our associates have received compensation from the subject company(ies) in the past 12 months: No
- We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past12 months: No
- We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months –No
- We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report –No
- We or our associates or Research Analyst or his/her relative's financial interest in the subject company(ies)- No
- Nature of financial interest in subject company, if any –Nil
- We, our associates or Research Analyst have actual/beneficial ownership of 1% or more securities of the subject company (ies) at the end of the month immediately preceding the date of publication of Research Report – No
- Subject company (ies) may have been client during twelve months preceding the date of distribution of the research report-No.
- We or our Associates or Research Analyst are engaged in market making of subject company – No
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Regulatory disclosures
Minerva Capital Research Solutions is an independent investment advisory firm founded by Nishant Gupta(SEBI registration no. INH000018896).
Registration granted by SEBI and certification from NISM in no way promise or guarantee that the research recommendation will provide any assured, minimum or risk-free return to the investors.
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Rating rationale
Minerva Capital Research Solutions endeavors to provide objective opinions and recommendations. Ratings are assigned to stocks according to their fair value vs current market price and then categorizes them as Buy, Hold, Reduce, Sell. The performance horizon is one year unless specified and fair value is defined as analyst’s valuation for a stock.
- Buy:> 15%
- Hold: -5% to 15%
- Reduce: -15% to -5%
- Sell: <-15%