Borana Weaves IPO Analysis: Should You Subscribe?
Get a detailed overview of Borana Weave’s IPO, including Financial Analysis, Key Strengths, GMP, Risk Factors and Expert Verdict.
Textile manufacturer Borana Weaves Ltd (BWL) launched its initial public offering (IPO) on May 20, 2025, with bidding scheduled to close on May 22, 2025. Ahead of the IPO opening, the grey market premium (GMP) surged to Rs 55, reflecting a 25% premium.
However, investors should have a clear understanding of both the potential rewards and risks before subscribing. This IPO analysis provides a comprehensive review to help make an informed decision.
Borana Weaves IPO Details
- Issue Details: Mainstream
- Issue Size: Rs 144.89 crore
- Fresh Issue: Rs 144.89 crore
- Offer for Sale: Nil
- Price Band: Rs 205 – Rs 216/ share
- Lot Size: 69 shares
- Listing Date: May 27, 2025
Overview of Borana Weaves Ltd
BWL specializes in manufacturing unbleached synthetic grey fabric—a crucial raw material for dyeing, printing and finishing in industries such as fashion, traditional technical textiles, interior design and home décor. The company also produces polyester textured yarn (PTY), derived from polyester oriented yarn (POY), which is integral to grey fabric production, enabling vertical integration within its textile operations.
Currently operating three weaving plants, BWL is raising funds to establish a fourth facility that will add 348 looms, increasing its production capacity by over 50%.
Borana Weaves Key Strengths
- Robust Financial Growth: BWL has delivered outstanding financial performance, achieving a CAGR of 117% in operational revenue, 182% in EBITDA and 262% in net profit between FY22 and FY24.
- Expanding Profit Margins: Profitability has strengthened consistently, with EBITDA margins increasing from 12.22% in FY22 to 20.68% in FY24 and net profit margins rising from 4.25% to 11.85% over the same period.
- Strong Return Metrics: BWL exhibits high operational efficiency, with Return on Equity (RoE) at 49.45% and Return on Capital Employed (RoCE) at 27.42% as of FY24.
- Improving Capacity Utilization: BWL has steadily expanded production capacity and improved utilization across its units, with capacity utilization rising from 56.93% in FY22 to 79.51% in FY24, reaching 79.62% by December 2024.
Borana Weaves Risk Factors
- Geographic Concentration: As of December 31, 2024, BWL derives over 98% of its revenue from customers based in Gujarat. The company lacks long-term contracts with these customers, making sales vulnerable to purchase order cancellations, policy changes or a slump in local demand.
- Revenue Concentration: As of December 31, 2024, approximately 45% of BWL’s revenue is derived from its top 10 customers. A decline in business from these key customers—whether due to factors specific to the customers, adverse market conditions, or broader economic challenges—may adversely affect its operations and results.
- Commodity Pricing Pressure: BWL’s main product, grey fabric, is a commodity with no differentiation or pricing power. Even a small price cut by competitors can lead to customer loss. The company must focus on efficiency and cost control to stay competitive, especially given that ~84% of its business comes from grey fabric and input costs like polyester yarn can be volatile.
Final Thoughts: Should You Subscribe to Borana Weaves IPO?
Surat-based Borana Weaves Ltd showcases impressive financial growth, backed by strong return metrics and healthy profitability margins.
From a valuation standpoint, the IPO appears reasonably priced, with a price-to-earnings (P/E) ratio of 18x. Furthermore, the grey market premium (GMP) points to a strong listing on the stock exchanges.
Looking at the broader industry, India’s apparel market is poised to expand from $74.5 billion in 2022 to $102.2 billion by 2026. Synthetic textiles—known for their affordability and versatility—are expected to be a key growth driver. Surat produces approximately 90% of India’s synthetic fabric and Borana Weaves is emerging as a fast-growing player right at the center of this ecosystem.
Given these factors, investors may consider subscribing to the IPO from a medium to long-term perspective.
For a deep dive into other IPOs, explore: IPO Corner on Liquide