Borana Weaves IPO has garnered significant attention, marked by a strong subscription rate on its first day. The IPO, which opened on May 20, 2025, and closes on May 22, 2025, aims to raise ₹144.89 crore through a fresh issue of 67,08,000 equity shares. The price band is set between ₹205 and ₹216 per share, with a minimum lot size of 69 shares. The strong initial response has prompted analysts to weigh in on whether investors should subscribe to the IPO.

Subscription Status and Market Response

On the first day itself, the Borana Weaves IPO was subscribed 5.89 times, according to BSE data. The retail investor portion was particularly well-received, being oversubscribed by 20.36 times. Non-institutional investors (NII) also showed strong interest, with their quota being subscribed 7.97 times. Qualified institutional buyers (QIBs) subscribed to 3% of their allocated portion. By afternoon of the first day, the IPO had been subscribed 4.46 times, driven by the retail segment which was oversubscribed 16.02 times. This enthusiastic response signals robust investor confidence in the company and its growth prospects.

Objectives of the IPO

Borana Weaves intends to utilize the net proceeds from the IPO for several key purposes. A significant portion of the funds will be allocated to finance the establishment of a new manufacturing facility in Surat, Gujarat. This facility aims to enhance the company's production capacity for grey fabric. Additionally, the IPO proceeds will be used to meet incremental working capital requirements and for general corporate expenses.

Financial Performance and Growth

Borana Weaves has demonstrated impressive financial growth in recent years. The company's revenue soared from ₹42.36 crores in 2022 to ₹199.60 crores in 2024, with profits reaching ₹23.59 crores. For the nine-month period ending December 31, 2024, the company reported revenue of ₹215.71 crore, surpassing the entire previous fiscal year's revenue. This remarkable growth trajectory highlights the company's strong market position and efficient operations. The company boasts impressive margins, with around 20% EBITDA and nearly 12% net profit. In FY24, Borana Weaves reported a return on equity (ROE) of nearly 49%.

Grey Market Premium (GMP)

The grey market premium (GMP) for Borana Weaves IPO has been positive, indicating a promising listing. The GMP is ₹55, suggesting that the shares are expected to list at ₹271 apiece, a 25.46% premium over the upper price band of ₹216.

Analyst Recommendations

Analysts have provided varied recommendations regarding the Borana Weaves IPO. Anshul Jain, Head of Research at Lakshmishree Investment and Securities, views the IPO as a "golden opportunity" for investors interested in the textile sector. He points to the company's robust ROE of 49.45% and a reasonable P/E ratio of approximately 18.26 as attractive valuation metrics. Anand Rathi suggests that the IPO can be considered for subscription for the long term, noting that, based on annualized FY25, the company is seeking a P/E of 14.7 times.

Company Overview

Founded in 2020 and based in Surat, Gujarat, Borana Weaves specializes in manufacturing unbleached synthetic grey fabric, which is used for dyeing, printing, and other textile processing. The company also produces polyester textured yarn (PTY Yarn). Borana Weaves operates three manufacturing units in Surat, equipped with modern machinery. The company's strategic location in Surat, close to its raw material suppliers, enables cost savings and efficient supply chain management.

Potential Risks

While Borana Weaves presents a compelling investment opportunity, it is essential to consider potential risks. As a small-cap IPO with a relatively small float, the stock may experience volatility post-listing.

Listing Details

The allotment for the Borana Weaves IPO is expected to be finalized on May 23, 2025, with shares credited to demat accounts by May 26, 2025. The tentative listing date on both BSE and NSE is set for May 27, 2025.