Borana Weaves Limited, a textile manufacturer based in Surat, specializing in unbleached synthetic grey fabric, recently got listed on the NSE and BSE. The shares debuted with a listing premium of approximately 12.5% over the IPO price, which, while healthy, was below the 19.91% Grey Market Premium (GMP) observed prior to listing.

What Does This Listing Premium Mean?

The listing premium is the percentage by which the stock’s first trading price exceeds its IPO issue price. Borana Weaves priced its shares in the band of ₹205–₹216, with the upper band price of ₹216. The shares listed at around ₹243 (12.5% above ₹216), compared to the ₹266 GMP price that was predicted in the grey market.

A listing premium above the IPO price generally indicates strong investor demand and positive market sentiment. However, the lower-than-GMP listing premium suggests some profit booking by grey market investors or a more cautious approach by public investors.

About Borana Weaves Business

Borana Weaves is primarily focused on manufacturing unbleached synthetic grey fabric, a critical raw material for various downstream textile industries, including fashion, technical textiles, home décor, and more. This grey fabric serves as a base for processes like dyeing and printing.

The company also produces Polyester Textured Yarn (PTY Yarn), used internally in their fabric manufacturing. The textile sector is witnessing rising demand for synthetic fibers, especially polyester, which is forecasted to grow significantly in India.

Financial Performance Highlights

• Revenue Growth: The company posted a remarkable CAGR of 116.84% in revenue from FY22 to FY24, growing from ₹42.33 crore to ₹199.05 crore.

• Profit Margins: Consistent profitability with PAT margins above 11% in most periods, though a recent dip to 4.25% was noted.

• Operational Efficiency: Advanced manufacturing infrastructure with water jet looms and pollution-light machinery supports quality and sustainability.

Industry Outlook

The Indian textile industry is rebounding with a growing preference for synthetic textiles. Key factors influencing growth include:

• Increasing domestic demand due to rising disposable incomes.

• Government initiatives like PLI and PM MITRA to boost technical textiles.

• Global supply chain shifts favoring India over competitors due to political and labor instability in Bangladesh.

• Rising global polyester demand driven by fashion trends and durability requirements.

However, the sector faces near-term headwinds like inflation, volatile raw material costs, and slow export demand due to global economic conditions.

Should You Buy, Sell or Hold Borana Weaves Shares Now?

Buy:

• If you believe in the long-term growth story of synthetic textiles and the company’s robust financial track record.

• Borana Weaves’ strategic expansion plans and modern manufacturing base position it well for growth.

• The listing premium, though lower than GMP, still shows positive market confidence.

Hold:

• If you already own shares, it may be wise to hold and monitor the stock for a few months as the company executes its expansion and the textile sector recovers.

• Look for quarterly performance and order book trends before making fresh decisions.

Sell:

• If you are a short-term investor looking for quick gains, you might consider booking profits given the stock’s premium listing relative to IPO.

• The market volatility and global economic uncertainties could impact near-term stock performance.

Conclusion

Borana Weaves IPO listing at a 12.5% premium is a positive signal, indicating solid market interest despite a slightly lower premium than grey market expectations. The company’s growth potential, underpinned by rising synthetic textile demand and strong fundamentals, makes it a promising long-term investment.

Investors should consider their risk appetite and investment horizon before deciding to buy, hold, or sell. Keeping an eye on industry trends, raw material price fluctuations, and the company’s operational execution will be key in the coming months.

The Upcoming IPOs in this week and coming weeks are 3B Films, N R Vandana Tex Industries, Scoda Tubes,Neptune Petrochemicals, Victory Electric Vehicles International, Wagons Learning.

The Current active IPO are Blue Water Logistics, Astonea Labs, Nikita Papers, Prostarm Info Systems, Aegis Vopak Terminals, Schloss Bangalore.

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