🧠 At a Glance
Cedaar Textile is spinning its way into public markets with a ₹60.90 Cr fresh issue IPO at a price band of ₹130–₹140. The Bengaluru-based yarn maker wants to modernize its machines and install solar panels (greenwashing much?). Financials show some flash—but also a few snags. Retail investors need ₹1.4L to enter this SME bet. Let’s unravel the numbers.
1. 🪡 WTF Do They Even Do?
- Incorporated in 2020 (yes, the COVID year), Cedaar Textile Ltd is a B2B yarn manufacturer.
- Their core product: Melange yarn, i.e., a stylish blend of fibers that makes T-shirts look cooler and sweaters more expensive.
- Product mix includes:
- Melange Yarns 🧶
- Solid Top-Dyed Yarns 🖌️
- Grey Fancy Yarns 🪢
- Fibres used: Cotton, Polyester, Viscose, Acrylic… basically the full wardrobe menu.
- Operations: Based in Yelahanka, Bangalore with 583 full-time payroll employees.
2. 📊 Financials – Spinning Profits or Tangled Threads?
| Metric | FY22 | FY23 | FY24 |
|---|---|---|---|
| Revenue (₹ Cr) | 220.44 | 161.88 | 191.01 |
| PAT (₹ Cr) | 7.99 | 4.59 | 11.05 |
| EBITDA Margin | — | 9.65% | 15.09% |
| ROE | — | — | 56.06% |
| Debt | ₹121 Cr | ₹137 Cr | ₹146 Cr |
Red flags:
- Revenue dropped from ₹220 Cr (FY22) to ₹161 Cr (FY23), then rebounded slightly.
- PAT doubled in FY24 — but with high borrowings. Is this margin recovery or just window dressing?
3. 💰 Valuation – Overdyed or Underrated?
- Price Band: ₹130–₹140
- Post-IPO EPS: ₹7.33 → Implied P/E of ~19.1x
- Industry P/E: ~14–18x for similar SMEs
- Price to Book: 4.16x
📏 Fair Value Range: ₹105–₹115
- Based on peer average P/E of ~15x and normalized EPS of ₹7.33
- At ₹140, it looks priced to perfection in a cyclical industry
4. 🧃 What’s Cooking? (And Why the IPO?)
IPO Size: ₹60.9 Cr (Fresh Issue)
Use of Funds:
- ₹24.9 Cr – Working Capital (cotton ain’t cheap, bro)
- ₹17 Cr – Machine Modernization (maybe the looms were still running on Windows XP)
- ₹8 Cr – Solar rooftop setup (ESG ka chashma)
News:
- Raised ₹9.52 Cr from anchor investors (including the usual SME suspects)
- Day 1 subscription was… um… lukewarm:
- Retail: 0.06x
- HNI: 0.22x
- QIB: 0.00x
🚨 That’s just 11% subscribed on Day 1. Not exactly “textile unicorn” vibes.
5. 🏦 Balance Sheet – Fiber-Heavy, Equity-Light
- Net Worth jumped from ₹9.6 Cr (FY22) → ₹25.2 Cr (FY24) → ₹60.7 Cr post-IPO
- But total debt also rose to ₹146 Cr. That’s Debt-to-Equity = 5.79x pre-IPO 😬
- Even after IPO, leverage remains high unless profits scale up meaningfully
6. 💸 Cash Flow – Sab Number Game Hai
- No specific operating cash flow disclosed, but given the rising debt and capex, free cash flow likely negative
- Heavy dependence on working capital cycles and receivables in B2B yarn deals
7. 📈 Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 56.06% (inflated by low equity) |
| ROCE | 26.90% |
| PAT Margin | 5.83% |
| EBITDA Margin | 15.19% |
| Debt/Equity | 5.79x pre-IPO |
| P/B | 4.16x |
👀 Looks sexy… until you realize the ROE is juiced by borrowed money.
8. 🧾 P&L Breakdown – Show Me the Money
Let’s see what they earned per crore of revenue in FY24:
- EBITDA: ₹28.81 Cr → EBITDA Margin ~15%
- PAT: ₹11.05 Cr → Net Margin ~5.8%
- A ₹191 Cr revenue base delivering ₹11 Cr profit looks good on paper, but it’s all about sustainability.
9. ⚔️ Peer Comparison – Thread Wars
| Company | Revenue (Cr) | PAT (Cr) | P/E | ROE |
|---|---|---|---|---|
| Cedaar Textile | ₹191 | ₹11.05 | 19.1x | 56% |
| R&B Denims (SME) | ₹205 | ₹8 | 15x | 18% |
| Vippy Spinpro | ₹98 | ₹4.5 | 12x | 22% |
| Nandan Denim | ₹1,400 | ₹47 | 10x | 12% |
📉 Most SMEs trade below 15x. Cedaar is asking for a premium P/E for a yarn business in a cotton crisis-prone country.
10. 🕵️ Misc – Promoters, Shareholding, Buzz
- Promoters: Rajesh Mittal, Virender Goyal, Saraswathi B.M., Nachappa M.B.
- Holding drops from 100% → 68.66% post-IPO
- Anchor lock-in ends August 2 & October 1, 2025
- Market Maker: NNM Securities Pvt Ltd (they’ve backed both rockets and wrecks in past IPOs)
11. 🧵 EduInvesting Verdict™
Yarn is hot, but this IPO pricing is hotter.
🧶 What’s good:
- 56% ROE, 15% EBITDA margin — looks like a profitable business
- Focused use of IPO funds (machines + solar = reasonable)
🧶 What’s meh:
- Revenue volatility + industry cyclicality
- Aggressive valuation (P/E ~19x vs 12–15x peers)
- Huge debt pile even after the IPO
- Day 1 subscription = 🥶
💭 If cotton prices rise or China dumps yarn, things unravel fast.
Verdict: Looks good on the loom, risky on the room. Apply only if you have extra liquidity and don’t mind volatility.
✍️ Written by Prashant | 📅 June 30, 2025
Tags: Cedaar Textile IPO, SME IPO 2025, NSE SME, Yarn Manufacturer IPO, Cedaar Textile Review, IPO Analysis, EduInvesting, Melange Yarn, B2B Textile IPO, June 2025 IPOs
