BP Wealth Club

BP Equities Institutional Research: IPO Note Company name: Borana Weaves Ltd. IPO rating: SUBSCRIBE Issue Details ¤ Offer period: 20th May 2025 – 22nd May 2025 ¤ Price Band: Rs. 205 to Rs. 216 ¤ Bid lot: 69 Shares ¤ Issue Size: Rs. 1.4 billion Valuation & Outlook Borana Weaves Limited (BWL), which commenced its operations in 2020, has made significant strides in positioning itself as a strong regional player, with healthy customer relationships and innovative product offerings. BWL appears well-positioned for sustained growth, backed by three strategic levers: capacity expansion, product diversification, and a favourable industry backdrop. The company is augmenting its installed capacity through a new Surat facility, enhancing its ability to serve rising synthetic fabric demand. With India’s polyester demand projected to grow from 4 MT to 6.7 MT by 2025 and synthetic textiles gaining traction across fashion, technical, and industrial applications, BWL is strategically placed to capitalise on this trend. It is also leveraging existing investments in water jet looms to diversify into high-margin technical textiles. Complementing these growth initiatives, BWL has delivered stellar financial performance, with a topline CAGR of 116.8% over FY22–FY24, EBITDA margin expansion from 12.2% to 20.7%, and a marked improvement in cash conversion. High capital efficiency (ROE of 49.5% in FY24) and continued investments funded by IPO proceeds further reinforce its medium-term growth visibility. While heavy capex may constrain free cash flows in the short term, it reflects a forward-looking strategy to capture scalable demand, reinforcing a positive outlook. The company is valued at a PE ratio of 18.3x on the upper price band based on FY24 earnings. Given its strong financial trajectory, strategic capacity expansion, and increasing presence in high-growth segments like synthetic and technical textiles, BWL is well-positioned to capture structural tailwinds in the industry. We thus recommend a ‘SUBSCRIBE’ rating for investors with a medium to long-term investment horizon. For disc ref: www.bpwealth.com/disclaimer