Shree Ram Twistex Ltd. is opening its Rs 110.24 crore initial public offering for subscription on February 23, offering investors exposure to India’s cotton yarn manufacturing sector. The Gujarat-based company produces compact ring spun and carded yarns serving textile manufacturers, garment exporters and fabric processors across domestic and international markets.
About the Company
Shree Ram Twistex manufactures cotton yarns including compact ring spun and carded yarns (both combed and carded varieties). The product portfolio also includes value-added yarns such as Eli Twist, Compact Slub Yarns, and Lycra-Blended Yarns used in denim, terry towels, shirting, sheeting, sweaters, socks, bottom wear, home textiles and industrial fabrics.
The company operates exclusively in the business-to-business segment, supplying to institutional buyers such as textile manufacturers, garment exporters, bulk purchasers and fabric processors. This B2B focus allows streamlined production and supply chain processes around large-scale buyer needs, ensuring consistent quality, delivery and efficient order fulfillment.
Operations also generate income from by-products including cotton waste sold to industries manufacturing non-woven fabrics and open-end yarns. The company also sells Viscose-Cotton Mix Yarn, FP Bales and Open-End Yarn to fabric manufacturers, weaving units and traders.
Shree Ram Twistex sells products in both domestic and international markets, with overseas sales routed through merchant exporters. Domestic sales are facilitated through direct sales to institutional customers and a network of brokers and agents. Major revenue comes from domestic markets. As of November 30, 2025, the company had 58 employees.
Financial Performance
| Fiscal Year | Total Income (Rs Cr) | Net Profit (Rs Cr) | PAT Margin (%) | RoCE (%) |
|---|---|---|---|---|
| FY23 | 213.58 | 2.05 | 0.96 | 8.61 |
| FY24 | 231.72 | 6.55 | 2.83 | 12.50 |
| FY25 | 256.32 | 8.00 | 3.14 | 13.37 |
| H1FY26 | 132.27 | 7.00 | 5.30 | 10.74 |
The company has posted growth in both topline and bottomline over the reported periods. Revenue grew at approximately 9.5% CAGR from FY23 to FY25, while net profit jumped from Rs 2.05 crore to Rs 8 crore over the same period.
However, the sharp margin expansion raises questions. PAT margins improved from 0.96% in FY23 to 5.30% in H1FY26—a 5.5x increase in profitability as a percentage of revenue. For a company operating in the highly competitive and fragmented cotton yarn manufacturing segment, such dramatic margin improvement over two years requires scrutiny regarding sustainability.
For the last three fiscals, the company posted average EPS of Rs 2.22 and average return on net worth of 9.23%.
Valuation Analysis
| Valuation Metric | Value |
|---|---|
| NAV (as of Sep 30, 2025) | Rs 27.47 |
| Price-to-Book Value | 3.79x |
| P/E (based on FY25 earnings) | 52.00x |
| P/E (based on FY26 annualized H1 earnings) | 29.71x |
At the upper price band of Rs 104, the issue is priced at 52x FY25 earnings and approximately 30x annualized FY26 earnings based on first-half performance. The price-to-book value stands at 3.79x based on NAV of Rs 27.47 as of September 30, 2025.
Peer Comparison
| Company | Current P/E |
|---|---|
| Ambika Cotton | 12.4x |
| Damodar Industries | 7.69x |
| Rajapalayam Mills | 9.49x |
| Shree Ram Twistex (issue price) | 52.0x (FY25) |
Listed peers in the cotton yarn segment trade at P/E multiples ranging from 7.7x to 12.4x. Shree Ram Twistex seeks a valuation 4-7x higher than comparable companies. The offer document notes these peers are not truly comparable on an apple-to-apple basis, raising questions about appropriate valuation benchmarks.
Capital Structure & Promoter Economics
The company has an interesting capital history. After issuing initial equity shares at par value of Rs 10, it issued further equity shares at Rs 20 per share between July 2014 and March 2016. The company issued bonus shares in the ratio of 1.5 for 1 in March 2024.
The average cost of acquisition of shares by promoters is Rs 3.33, Rs 5.48 and Rs 6.22 per share. At the issue price of Rs 104, this represents a 31-48x gain for promoters depending on their acquisition vintage.
Post-IPO, current paid-up equity capital of Rs 29.38 crore will expand to Rs 39.98 crore, representing 26.52% dilution.
Dividend Policy
The company has not paid any dividends for the reported periods. It will adopt a prudent dividend policy based on financial performance and future prospects, but no specific payout commitment has been made.
Key Investment Considerations
Positives:
- Consistent revenue growth over reported periods
- Improving profitability trajectory
- B2B focus with institutional customers provides steady demand
- Diversified product portfolio including value-added yarns
- Fund deployment toward captive power (cost reduction) and working capital
Concerns:
- Valuation at 52x FY25 earnings appears excessive compared to listed peers at 7-12x
- Sharp margin expansion from 0.96% to 5.30% in competitive, fragmented segment raises sustainability questions
- Small employee base of 58 suggests limited operational scale
- No dividend history
- BRLM has poor listing track record with 45% of recent IPOs opening at discount
- Post-IPO NAV data missing from offer documents
- Very high promoter gains (31-48x) relative to issue price
Risk Factors:
- Highly competitive and fragmented cotton yarn industry
- Dependence on cotton prices (raw material volatility)
- Working capital intensive business model
- Limited pricing power in commodity product segment
- Export sales routed through merchant exporters (indirect market access)
Issue Snapshot
| Parameter | Details |
|---|---|
| Issue Opens | February 23, 2026 |
| Issue Closes | February 25, 2026 |
| Price Band | Rs 95-104 per share |
| Issue Size | Rs 110.24 crore (fresh issue) |
| Lot Size | 144 shares |
| Minimum Investment | Rs 14,976 (at upper band) |
| Listing | BSE, NSE |
| Market Cap (at Rs 104) | Rs 415.74 crore |
| Post-IPO Dilution | 26.52% |
Fund Utilisation
| Purpose | Amount (Rs Crore) |
|---|---|
| Captive wind mill power plant | 39.00 |
| Debt repayment/prepayment | 14.89 |
| Working capital | 44.00 |
| General corporate purposes | Balance |
