🧾 At a Glance

Borana Weaves Ltd has grown its profits 20x in just 3 years, operates at 22% margins, and delivers 60%+ ROE — yet barely anyone outside the textile belt knows it exists. With ₹290 Cr sales and ₹40 Cr net profit in FY25, this Surat-based grey fabric player is trying to spin its way into midcap fame.

But is this growth sustainable or just another IPO-era sprint?

🧵 About the Company

• Incorporated in 2020, Borana Weaves manufactures unbleached synthetic grey fabric used in fashion, home décor, and industrial textiles.
• It also produces polyester textured yarn for internal consumption.
• Located in Surat, Gujarat — India’s synthetic textile heartland.
• Recently listed (May 2025) — still very fresh on the public markets.

👨‍🏭 Promoters & Ownership

• Promoter holding: 65.23% (solid)
• FIIs: 4.83% (early entry!)
• DIIs: 11.92% — surprising for a new textile listing
• Public: Just 18%
• Shareholders: 10,885 (as of May 2025)

This cap table looks clean. No over-pumped retail hype yet — rare for newly listed SMEs.

📊 Financial Performance Snapshot

🚀 3-year profit CAGR: 183%
🧵 3-year sales CAGR: 90%
💸 Zero dividends yet, but reinvestment is visible in the books.

💸 Balance Sheet Breakdown (FY25)

🧠 The company is asset-light by textile standards, but FY24 saw aggressive capex (₹48 Cr), which seems to have stabilized in FY25.

🧮 Valuation & Fair Value Estimate (FY26–27)

CMP is ₹229 → the market is currently not pricing in forward earnings aggressively. Either investors don’t trust the numbers yet, or the recent IPO effect hasn’t kicked in fully.

🏭 Business Model & Segment Analysis

• Grey fabric = B2B product used in downstream processing
• Not a brand-driven company — revenues are volume & cost-efficiency linked
• Uses own yarn (polyester textured) to maintain quality and margins
• OPM of 22% is surprisingly high for a textile player — margin sustainability is key to watch

⚠️ Red Flags & Risks

• 📉 High ROE, low tax + recent IPO = Be cautious. ROE of 60% is rare unless:
  • Asset-light model (check ✅)
  • Low base effects (check ✅)
  • OR… Accounting games (not yet detected ❌)
• 🏭 Grey fabric = commodity business. No pricing power unless backward integration is exploited.
• 📌 Interest capitalisation warning in Screener = red flag if not transparently accounted.
• 🧨 EPS went from ₹1,800 → ₹5.47 due to split adjustment — that’s not growth, just optics. Real EPS now seems normalized.

🔍 EduInvesting Take

Borana Weaves is the textile player Gen Z forgot — not because it’s bad, but because it doesn’t have a catchy Instagram page.

It manufactures what other textile brands use — not what consumers see. That’s boring. And that’s why it’s probably undervalued.

At ₹229, it trades at a P/E of ~15, with ROCE > 40%, and margin consistency that rivals even some FMCG stocks.

🚨 But: No dividend. No visibility beyond Surat. And grey fabric isn’t sexy.

It’s the textile equivalent of a guy who runs 5 km daily, eats only roti-dal, but somehow has a six-pack.

📊 TL;DR Summary

• 🧵 Surat-based grey fabric and yarn manufacturer
• 🚀 3Y profit CAGR: 183%, Sales CAGR: 90%
• 💸 FY25 Revenue: ₹290 Cr, Profit: ₹40 Cr
• 💰 ROE: 60%, ROCE: 41%, OPM: 22%
• CMP ₹229 → trades at ~15x trailing earnings
• ⚠️ Possible interest cost capitalisation, limited public awareness, post-IPO price correction phase

Verdict: Borana Weaves might be boring. But boring + cheap + profitable = not a bad combo for a low-key compounder.

Just make sure you’re not getting tangled in synthetic hype.

Tags: Borana Weaves, SME IPO, textile stocks, Surat fabric companies, grey fabric manufacturers, polyester yarn, value stocks, EduInvesting textile analysis

Author: Prashant Marathe
Date: 12 June 2025