A Gujarat-based integrated cotton ginner-and-spinner opens its Rs 22.20 crore BSE SME issue on September 21
Vivekanand Cotspin Ltd (VCL) operates in the cotton textile value chain — cotton processing and yarn manufacturing — combining ginning of raw cotton (kapas) into cotton bales and cotton seed, and spinning of cotton bales into cotton yarn.
It also trades in cotton bales and cotton yarn in the ordinary course of business. Its products span cotton bales, cotton seeds and cotton yarn (carded and combed/compact), plus by-products like comber noil and yarn waste.
The integrated, two-stage model is the pitch. In ginning, VCL separates cotton fibres from seeds (the first step in preparing raw cotton); in spinning, it converts the clean fibre into yarn in various counts and quality grades, used by textile mills for weaving and knitting.
This forward integration — from raw kapas through to finished yarn — lets it capture more of the value chain rather than depending on bought-in fibre, and its yarn serves both domestic and export customers, with exports a smaller but meaningful share.
The location is a genuine advantage. VCL’s facility at Rangpurda, Kadi (Mahesana district, Gujarat), sits close to the rich cotton-growing areas of Maharashtra and the Saurashtra region of Gujarat — near its raw-material source.
It has installed capacity of about 8,000 MT of cotton bales and 4,551 MT of cotton yarn per annum, with ginning capacity of ~400 bales/day and 25,536 spindles.
Notably, capacity utilisation diverges between the two lines: cotton-bale utilisation rose to ~92.8% in FY26, but cotton-yarn utilisation fell to ~67% (from ~81% in FY24) — a point worth watching.
It had 146 employees as of May 30, 2026, and the promoters are the Patel family (Vivekanand Group).
Issue Details
| Particulars | Details |
|---|---|
| Issue Opens | September 21, 2026 |
| Issue Closes | September 23, 2026 |
| Listing | BSE SME |
| Listing Date | September 26, 2026 |
| Issue Type | Book Built |
| Price Band | Rs 32 – Rs 37 per share |
| Face Value | Rs 10 |
| Issue Size | Rs 22.20 crore (60,00,000 shares, entirely fresh) |
| Min. Application | 6,000 shares (2 lots; multiples of 3,000 thereafter) |
| Min. Retail Investment | Rs 2,22,000 |
| Post-IPO Market Cap | Rs 82.33 crore |
| IPO as % of Post-IPO Capital | 26.97% |
| Lead Manager | Swastika Investmart Ltd. |
| Market Maker | Sunflower Broking Pvt. Ltd. |
| Registrar | MUFG Intime India Pvt. Ltd. |
The issue is entirely a fresh issue. From the net proceeds, VCL will utilise Rs 11.00 crore for working capital, Rs 5.27 crore for capex on plant and machinery, and the rest for general corporate purposes. The absence of an OFS means all proceeds flow into the business — a positive.
Price Band Check
At the upper band of Rs 37, on FY26 earnings the issue is valued at a P/E of about 22.29x, with a P/BV of 2.08 on the March 31, 2026 NAV of Rs 17.81 (post-IPO NAV disclosure is missing). On the FY25 base the P/E is about 20.22x.
GMP Watch
Grey-market interest has been flat. As of the days around opening, the Vivekanand Cotspin IPO GMP stood at ₹0.
Financial Performance
| Particulars (Rs cr) | FY23 | FY24 | FY25 | FY26 |
|---|---|---|---|---|
| Total Income | 358.02 | 75.58 | 290.94 | 409.32 |
| Net Profit (PAT) | 3.35 | 0.87 | 4.07 | 3.69 |
| PAT Margin (%) | — | 0.94 | 1.35 | 0.90 |
| RoCE (%) | — | 13.41 | 12.16 | 13.14 |
Total income has swung wildly: Rs 358.02 crore (FY23), collapsing to Rs 75.58 crore (FY24), recovering to Rs 290.94 crore (FY25), then rising to Rs 409.32 crore (FY26). PAT has been just as erratic: Rs 3.35 crore → Rs 0.87 crore → Rs 4.07 crore → Rs 3.69 crore.
Critically, in FY26, net profit actually fell (down ~9%) even as revenue jumped 41% — profit shrinking on higher turnover. PAT margin was just 0.90% in FY26 (and 0.94–1.35% across the period) — wafer-thin, characteristic of the commoditised, cyclical cotton ginning-and-trading business, where raw-cotton prices dominate and a large chunk of “revenue” is low-margin bale/yarn trading.
The company reported an average EPS of about Rs 2.70 and an average RoNW of 18.63% (a headline that flatters the underlying profitability). Borrowings are elevated at around Rs 45 crore (debt-to-equity ~1.56) — high for a small company. The company has no dividend history.
Peer Comparison
The offer document lists Lagnam Spintex and Deepak Spinners as peers, trading at P/Es of roughly 6.78x and 9.68x (as of September 17, 2026). These differ in scale and product mix: VCL’s ~22x FY26 P/E is around three times its listed peers’ multiples — for a company with sub-1% margins and falling profits.
Risks to Consider
Exorbitant valuation is the headline concern. At ~22x FY26 (and ~20x FY25) for a business with a ~0.90% PAT margin and falling profit, and roughly triple its listed peers’ P/E, the issue offers no valuation cushion whatsoever — the single biggest red flag.
Wafer-thin, low-quality margins. PAT margins under 1% mean the business is extremely sensitive to raw-cotton price swings, and much of the revenue is low-margin trading — so profitability is fragile and hard to scale.
Inconsistent, cyclical earnings. Both revenue and profit have swung sharply year to year (FY24 revenue collapsed to a fifth of FY23), and FY26 profit fell despite higher revenue — reflecting the volatile, cyclical nature of the cotton-textile sector.
High leverage. Borrowings of ~Rs 45 crore (D/E ~1.56) are high for a small SME, and finance costs weigh on already-thin margins; the raise funds working capital rather than deleveraging.
