Is Borana Weaves IPO Good or Bad - Detailed Review

Borana Weaves IPO is kicking off its initial public offering, which will be open from May 20, 2025, to May 22, 2025. While considering applying for this IPO, certain questions may arise in your mind, including whether the Borana Weaves IPO is good or bad, whether it is worth investing in this IPO, and so on. 

This article offers a comprehensive Borana Weaves IPO review, covering its business operations and fundamental analysis to help you make an informed investment choice.

Borana Weaves IPO Review

Borana Weaves presents a compelling investment opportunity with demonstrated strong financial performance and a clear growth trajectory. The company has shown exceptional revenue and profit growth in a short time frame, with improving margins and strong returns on capital.

However, investors should weigh these positives against the concentration risks (geographic, operational, and product) and the absence of directly listed peers for valuation comparison. The company's growth strategies appear sound, focusing on both vertical integration and horizontal expansion.

The IPO proceeds are largely directed toward capacity expansion and working capital, suggesting the company is positioning itself for continued growth. Given its financial strength, established market position in Gujarat, and expansion plans, Borana Weaves appears well-positioned to capitalize on the growing synthetic textile market, though cautious consideration of the identified risks is advised.

Company Overview of Borana Weaves IPO

Incorporated in 2020, Borana Weaves is a textile manufacturing company based in Surat. The company specializes in the production of unbleached synthetic grey fabric which caters to various industries including fashion, traditional textiles, home decor, and interior design. This fabric is multifaceted, making it a valuable resource in the supply chain. Additionally, the company also manufactures polyester textured yarn (“PTY Yarn”), which is produced by heating polyester-oriented yarn (“POY Yarn”).

The company runs its business through its three manufacturing units situated in Surat, Gujarat. As of December 31, 2024. The company is equipped with 15 texturizing machines, 6 warping machines, 700 water jet looms and 10 folding machines active at its three units.

Borana Weaves has established strong relationships with wholesalers in Gujarat, and its direct operations in the region have helped it build a robust customer base. During FY24 and the first nine months of FY25, the company served 170 and 204 customers, respectively, generating revenues of Rs.199.05 crore and Rs.211.61 crore.

The company has showcased exponential growth in revenues which is mainly derived from its sale of Grey Fabric. The below image shows you the revenue contribution of company from its respective segments.

Source: RHP of the company

Industry Overview of Borana Weaves IPO

The synthetic fabric industry in India has shown notable resilience and adaptability in recent years, despite fluctuations in production. After reaching 95,897 thousand metric tons in 2018-19, output declined due to pandemic-related disruptions, falling to 83,296 thousand metric tons in 2020-21. However, the sector has rebounded steadily, driven by evolving consumer demand, technological advancements, and market trends. With a CAGR of 5.19% from 2018-19 to 2023-24, the industry reflects a strong recovery and continued growth trajectory.

Financial Overview of Borana Weaves IPO

Source: RHP of the company

Since its commencement of operations, the company has showcased exceptional performance with revenues quadrupling in revenue from Rs. 42.33 Crores in FY22 to 199.05 in FY24. This translates to a CAGR of 116.84%. In the three financial years.

The profits of the company have also followed a similar trajectory increasing from merely Rs.1.79 crores in FY22 to Rs.23.58 crores in FY24. During the same period, the company’s profit margins have also increased from 4.25% to 11.85% reflecting its improvement in overall efficiency along with the increasing business.

While the RHP only mentions the company’s financials for the first nine months of FY25, they are nothing short of exceptional. During the nine months, the company has beaten its previous financial years' revenue and profits which stand at Rs.211.61 crores and Rs.29.30 crores, respectively.

The company’s operating cash flows have also increased every year and were reported at Rs.25.77 crores in nine months of FY25 which indicates the company’s ability to meet its day-to-day expenses. When it comes to generating returns, we can see that the company reported an ROE of 27.42% and an ROCE of 49.45% reflecting exceptional return on shareholders' capital and an efficient use of company resources.

With such exceptional financial results, the company demonstrates a strong foothold in the business

Strengths and Risks of Borana Weaves IPO

Let’s dive into the strengths and weaknesses to assess if the Borana Weaves IPO is good or bad for investors

Strengths 

• The versatility of grey fabric which the company manufactures allows it to complement a wide range of unbleached fabrics across different styles, making it a valuable resource in the textile supply chain. Furthermore, the company is well-positioned to capitalize on the demand in this sector.

• The company’s strong regional presence in Gujarat, with operations based in Surat, has enabled it to build deep relationships with key suppliers and customers. Additionally, its proximity to major textile hubs like Ahmedabad and Mumbai further enhances its market reach and connectivity.

• The company uses water jet looms to enhance efficiency and precision in synthetic grey fabric production. This advanced technology ensures uniform texture, reduces yarn breakage, minimizes waste, and allows for high-speed operations. This results in consistent quality and streamlined manufacturing compared to traditional methods.

• Borana Weaves’ growth has been strongly driven by the experience of its promoters and leadership team. With many years in the textile industry, they have built solid relationships with suppliers, customers, and other stakeholders. Their deep understanding of fabric and yarn manufacturing has helped the company grow steadily and expand its operations.

Risks

• As of December 31, 2024, over 98% of Borana Weaves’ revenue comes from customers in Gujarat, with no long-term contracts in place, exposing the company to risks from order cancellations or demand fluctuations.

• With offices, manufacturing units, and 90% of raw material suppliers located in Gujarat, the company is exposed to region-specific risks such as regulatory changes, labor unrest, or natural disasters.

• The company sources its key raw material, POY yarn, from promoter group entities. Any disruption or termination of these arrangements could impact its operations and financial health.

• The company heavily relies on grey fabric, which accounted for 84.24% of revenue in the first nine months of FY25. A decline in demand, production, or pricing of this product could adversely affect its business. 

Strategies of Borana Weaves IPO

• The company aims to capitalize on industry growth by leveraging its scale, network, and customer base, guided by its experienced promoters.

• The company is focused on increasing wallet share from existing customers while expanding into new markets such as Bharuch, Vapi, and Valsad. 

• With growing urban demand for easy-care synthetic textiles, the company is also exploring innovative products like RPU-coated jacketing fabric to capture emerging opportunities.

Borana Weaves IPO Vs Peers

Given its unique business model and specialized product portfolio, Borana Weaves currently has no directly comparable listed peers, either in India or internationally. This makes traditional industry benchmarking challenging, as there are no companies of a similar scale and scope operating in the same niche segment.

Objectives of Borana Weaves IPO 

The fresh issue by the IPO will be used by the company for the following purposes:

• The company intends to finance Rs.71.34 Crore to establish a new manufacturing unit in Surat, Gujarat which is meant to expand its production capabilities 

• To fund the company’s working capital requirement of Rs.26.50 Crore.

• General corporate purposes.

Borana Weaves IPO Details

IPO Dates

Borana Weaves IPO will be open for subscription from May 20, 2025, to May 22, 2025. The allotment of shares to investors will take place on May 23, 2025, and the company will be listed on the NSE and BSE on May 27, 2025.

IPO Issue Price

Borana Weaves Limited is offering its shares in the price band of Rs.205 to Rs.216 apiece. This means you would require an investment of Rs. 14,904 per lot (69 shares) if you are bidding for the IPO at the upper price band.

IPO Size

Borana Weaves is issuing a total of 67,08,000 shares, which is worth Rs.144.89 crores which is completely offered through a fresh issue.

IPO Allotment Status

Investors who applied for the IPO can check their IPO allotment status on May 23, 2025, through the registrar's website: KFIN Technologies Limited, BSE, NSE, or their stockbroker platform.

IPO Listing Date

The shares of Borana Weaves Limited will be listed on the NSE and BSE on May 27, 2025.

IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free.

Apply for Borana Weaves IPO