Siddhi Cotspin IPO: Weaving Threads of Opportunity in the Textile Sector
The Indian textile industry is a cornerstone of the economy, and within it, the cotton yarn sector holds significant promise. As a potential investor, navigating the public markets requires diligence and understanding. We're here to unravel the details of the upcoming Siddhi Cotspin Limited SME IPO, offering a comprehensive look into this textile manufacturer's journey to the stock exchange. Let's delve deep to help you make an informed decision about this potential investment.
**Disclaimer:** Investing in IPOs carries risks, especially in the SME segment. This analysis is for informational purposes only and does not constitute financial advice. Always consult a qualified financial advisor before making investment decisions.
**Understanding Siddhi Cotspin Limited: Company Profile**
Established in 2015, Siddhi Cotspin Limited has carved a niche in the manufacturing and distribution of various cotton yarns, including both standard and value-added specialty yarns. Their product portfolio is diverse, catering to a broad spectrum of textile applications.
**Core Business & Offerings:**
- Compact Carded and Combed Hosiery
- Compact Weaving Yarns
- Carded and Combed Yarns
- Eli Yarns (KW & CW)
- Slub and Siro Slub Yarn
- Lycra-Core Spin Yarn (Spandex)
- TFO Double Yarn (known for enhanced strength and durability)
The company primarily supplies its products to textile manufacturers, garment exporters, and various distributors, building a reputation for consistent quality, reliable delivery, and strong customer relationships.
**Manufacturing Prowess:**
Siddhi Cotspin operates a state-of-the-art manufacturing facility situated in Dholi, Ahmedabad, Gujarat. This facility boasts a substantial spinning capacity of 29,376 spindles, enabling an annual production of approximately 90,11,850 kgs of cotton yarn and 2,70,35,550 kgs for value-added yarns. The integration of advanced, automated machinery ensures high productivity and maintains stringent quality control from raw material sourcing to the final product. The company also emphasizes sustainable practices, striving to minimize waste and conserve energy.
**Siddhi Cotspin IPO Insights: The Public Offering Details**
Siddhi Cotspin's upcoming IPO is a book-built issue, combining a fresh issue of new shares and an offer for sale (OFS) by existing shareholders.
| Detail | Information |
|---|---|
| IPO Type | SME Book Built Issue |
| Issue Size | ₹69.85 Crores (64,68,000 shares) |
| – Fresh Issue | ₹53.40 Crores (0.49 crore shares) |
| – Offer for Sale (OFS) | ₹16.46 Crores (0.15 crore shares) |
| Face Value | ₹10 per share |
| Issue Price Band | ₹102 to ₹108 per share |
| Minimum Lot Size | 1,200 shares |
| Listing Exchange | NSE SME |
| Lead Manager | Swastika Investmart Ltd. |
| Registrar | Kfin Technologies Ltd. |
| Market Maker | Jevin Stock Broker Private Limited |
**Crucial Dates for Investors: IPO Timeline**
For any IPO, knowing the key dates is paramount. Here's a tentative schedule for the Siddhi Cotspin IPO:
**Investor Allocation and Lot Size Breakdown**
The IPO shares are reserved for various investor categories as per regulatory guidelines. Understanding the minimum and maximum investment limits is crucial for applying.
**Reservation Details:**
| Investor Category | Shares Offered | Percentage |
|---|---|---|
| Market Maker | 3,24,000 | 5.01% |
| Qualified Institutional Buyers (QIB) | 6,14,400 | 9.50% |
| Non-Institutional Investors (NII / HNI) | 16,58,400 | 25.64% |
| Retail Individual Investors (RII) | 38,71,200 | 59.85% |
| Total Shares Offered | 64,68,000 | 100.00% |
**Investment Lot Size:**
Investors are required to bid for a minimum of 1,200 shares, and in multiples thereof. The table below illustrates the investment structure for different investor categories:
| Investor Category | Minimum Lots | Shares | Amount (at upper price band) |
|---|---|---|---|
| Retail Individual Investor (Min) | 2 | 2,400 | ₹2,59,200 |
| Retail Individual Investor (Max) | 2 | 2,400 | ₹2,59,200 |
| Small HNI (Min) | 3 | 3,600 | ₹3,88,800 |
| Small HNI (Max) | 7 | 8,400 | ₹9,07,200 |
| Big HNI (Min) | 8 | 9,600 | ₹10,36,800 |
**Promoter Profile and Shareholding**
The driving forces behind Siddhi Cotspin Limited are Mr. Navin Saraogi and Mr. Aansh Rajesh Bindal. Their vision and experience are pivotal to the company's operations and strategic direction.
**Promoter Shareholding Dynamics:**
- Pre-Issue Promoter Holding: 85.57%
- Post-Issue Promoter Holding: 65.56%
The reduction in promoter holding post-issue reflects the equity dilution from the fresh issue of shares, a common occurrence in IPOs designed to raise capital.
**Siddhi Cotspin's Financial Performance Snapshot**
A quick look at the company's financial results provides insights into its operational health and growth trajectory.
| Period Ended | 31 Mar 2025 (₹ Cr) | 31 Mar 2024 (₹ Cr) | 31 Mar 2023 (₹ Cr) |
|---|---|---|---|
| Assets | 182.83 | 181.25 | 184.13 |
| Total Income | 724.66 | 581.18 | 199.88 |
| Profit After Tax (PAT) | 13.08 | 12.18 | 6.02 |
| EBITDA | 32.87 | 34.72 | 25.10 |
| Net Worth | 79.44 | 66.36 | 54.18 |
| Total Borrowing | 67.11 | 90.58 | 113.78 |
Between fiscal year 2024 and 2025, Siddhi Cotspin demonstrated a 25% increase in total revenue, while its profit after tax (PAT) grew by 7%. This indicates healthy top-line growth and stable profitability. A notable reduction in total borrowing over the years also reflects prudent financial management.
**Key Performance Indicators (KPIs): As of March 31, 2025**
| KPI | Value |
|---|---|
| Return on Equity (ROE) | 17.95% |
| Return on Capital Employed (ROCE) | 14.88% |
| Debt/Equity Ratio | 0.84 |
| Return on Net Worth (RoNW) | 16.47% |
| PAT Margin | 1.81% |
| EBITDA Margin | 4.54% |
| Price to Book Value | 2.65 |
| Market Capitalization | ₹263.59 Crores |
**Valuation Metrics:**
| Metric | Pre-IPO | Post-IPO |
|---|---|---|
| Earnings Per Share (EPS) | ₹6.72 | ₹5.36 |
| Price/Earnings (P/E) Ratio (x) | 16.06 | 20.15 |
The P/E ratio post-IPO indicates a higher valuation compared to pre-IPO, which is common as public companies often trade at a premium. The post-IPO EPS is calculated based on the increased number of shares post-issue.
**Strategic Objectives of the IPO**
The funds raised through this public offering are intended for several key strategic initiatives:
- **Working Capital Enhancement:** A significant portion of the net proceeds, approximately ₹25.10 crores, will be directed towards meeting the company's working capital requirements, ensuring smooth day-to-day operations and growth.
- **Debt Reduction:** The company plans to utilize around ₹8.97 crores for the repayment or prepayment of certain outstanding borrowings, which will help strengthen its balance sheet and reduce financial leverage.
- **General Corporate Purposes:** The remaining funds will be allocated for various general corporate needs, which could include strategic investments, expansion initiatives, or other operational expenditures.
**SWOT Analysis: Siddhi Cotspin Limited**
A fundamental part of any investment analysis involves assessing a company's strengths, weaknesses, opportunities, and threats.
**Strengths:**
- **Experienced Leadership:** Guided by experienced promoters and a capable management team.
- **Quality Focus:** Commitment to maintaining best-in-class quality standards for all products.
- **Robust Supply Chain:** Possesses a strong and diversified supplier base, ensuring raw material availability.
- **Operational Efficiency:** Effective utilization of resources leads to optimal operational performance.
- **Customer Loyalty:** Cultivated long-standing relationships with its customer base, indicating trust and reliability.
- **Modern Infrastructure:** Equipped with an advanced, automated manufacturing facility.
- **Sustainable Practices:** Adopts eco-friendly manufacturing processes, minimizing environmental impact.
**Weaknesses:**
- **Competitive Landscape:** Operates in a highly competitive and fragmented textile market.
- **Valuation Concerns:** The IPO appears aggressively priced based on recent financial data, as noted by some analysts.
- **Raw Material Volatility:** Cotton prices can be volatile, potentially impacting production costs and profit margins.
**Opportunities:**
- **Growing Textile Demand:** The overall growth of the textile industry, especially for value-added and specialty yarns.
- **Market Expansion:** Potential to expand market reach both domestically and internationally.
- **Technological Upgrades:** Opportunities for further technological advancements to enhance efficiency and product innovation.
- **Diversification:** Scope to further diversify product offerings based on emerging market trends.
**Threats:**
- **Intense Competition:** Pressure from existing players and new entrants in the cotton yarn segment.
- **Economic Downturns:** Global or domestic economic slowdowns could impact consumer spending on textiles.
- **Trade Policies:** Adverse changes in government policies or international trade agreements.
- **Environmental Regulations:** Stricter environmental norms could lead to increased compliance costs.
**Navigating the Application Process**
For those considering applying to the Siddhi Cotspin IPO, the process is streamlined for convenience.
**Applying Online:**
You can apply for the IPO online using either UPI or ASBA (Applications Supported by Blocked Amount) through your bank's net banking portal. Many popular brokers also offer integrated IPO application services.
**Example: Applying via Zerodha (for existing customers):**
- Log in to your Zerodha Console (back office).
- Navigate to the 'Portfolio' section and click on 'IPOs'.
- Find the 'Siddhi Cotspin IPO' and click the 'Bid' button.
- Enter your UPI ID, desired quantity (in multiples of the lot size), and the price.
- Submit your application form.
- Approve the mandate notification on your UPI app (e.g., net banking or BHIM app) to confirm your application.
Always refer to your broker's specific IPO application guide for detailed instructions.
**Company and Registrar Information**
Should you require further information or assistance, here are the key contact details:
**Siddhi Cotspin Ltd. Contact:**
- Address: Survey 279 & 280, Unit No.13, Sub Plot No. 18, Sector 3 of Dholi Integrated Spinning Park, Ahmedabad, Gujarat, 382240
- Phone: +91 70690 08810
- Email: cs@siddhicotspin.com
- Website: http://www.siddhicotspin.com/
**Registrar for the Issue (Kfin Technologies Ltd.):**
- Phone: 04067162222, 04079611000
- Email: scpl.ipo@kfintech.com
- Website: https://ipostatus.kfintech.com/
**Conclusion: A Thread to Consider?**
Siddhi Cotspin Limited presents an opportunity for investors interested in the textile sector, particularly in cotton yarn manufacturing. The company demonstrates growth in revenue and profit, coupled with a strong manufacturing base and experienced management. While the valuation might appear on the higher side, its solid financial performance and strategic objectives for utilizing IPO proceeds are points to consider.
As with any investment, particularly in the SME segment, a thorough understanding of the company's fundamentals, market dynamics, and your personal risk appetite is essential. Investors should review all available documents, including the Red Herring Prospectus (RHP), and consider market conditions before making an investment decision.
This IPO could be an interesting proposition for well-informed investors looking for long-term growth potential within India's robust manufacturing landscape.