Borana Weaves - knitting a stronger portfolio

[gaurav]

This is my first attempt at starting a thread. I am grateful to this forum for providing so much knowledge with a lot of openness. I am an IT guy with limited understanding of the investment world. I have no expertise whatsoever in textile industry. But I have understood the importance of headwinds and tailwinds – fo shure. In my opinion, Indian textile industry is at the crossroads today with lot of tailwinds. For starters we now have no obligation to deter own businesses to keep our silly neighbors happy. Here is the recent bite from Piyush Goyal (Minister of Commerce and Industry of India): https://www.youtube.com/shorts/TDkdt1-8bXs
Indian govt recent anti-dumping probe on the imported polyester textured yarn and imported polyester partially yarn signals further policy support for the domestic manufacturers. This coupled with recent FTA with European Union are beneficial to textile industry. Additionally, govt has permitted 100% FDI in textile industry.

Before we move further, I highly recommend watching this video from SOIC to understand the value chain of textile industry: https://www.youtube.com/watch?v=egZR1Ga4ltU

Borana Weaves Limited is a textile manufacturing company engaged in the production and sale of woven fabrics. The company’s products are primarily used by garment manufacturers, exporters, and other textile processors. Borana Group is one of the largest producers of greige polyester woven fabrics in India, producing 22 crore metres of high-quality synthetic and blended greige polyester fabrics annually. Borana Weaves started as a small textile trader back in 1975. Overtime, the business evolved and the company came with its IPO in May, 2025 with a price of 216. The purpose of IPO was to finance the cost of establishing a new manufacturing Unit to expand its production capabilities, funding incremental working capital requirements and general corporate use.

Here is a brief detail on the Promoters and executive leadership:
Mangilal Ambalal Borana – Chairman & Managing Director
Founder and promoter of the company with multiple decades of experience in the textile industry; drives overall strategy and vision.
Ankur Mangilal Borana – Chief Executive Officer (CEO)
Heads operational functions including production, sales, procurement, and HR. He holds a Bachelor’s degree in Commerce from Veer Narmad South Gujarat University with 13 years of industry experience
Rajkumar Mangilal Borana – Chief Financial Officer (CFO)
Leads financial strategy, commercial planning, and corporate finance functions; has significant industry experience across textiles and related sectors. he has same qualification as Ankur.

Now lets deep dive into the business. Business has two segments Greige Fabric and PTY Yarn. Griege Fabrics contributes about 90% of revenue while remaining is done by PTY Yarn. Greige Fabric is utilized in below applications:

• Apparel and Garments: Processed into soft, everyday garments for men and women.

• Home Textiles: Processed into soft, durable bedding products that offer a premium feel.

• Technical Textiles: Processed into durable, weather-resistant materials for tent applications, hospital linens and waterproof fabrics.

Borana has four advanced manufacturing units based out of Surat, the Manchester of East. This location gives strategic advantage from procuring raw materials to selling finished products. Proximity to major ports may also help with future exports (currently only clients export). Current capacity, as of Dec 2025, stands at 39.21 crore meters. The company claims to operate at scale that is currently unmatched among the companies with a similar product focus. Company plans to meet 70% of its electricity demands through renewable sources (18 crores worth power saving) and taking steady steps to achieve this target. Company plans to double its capacity in next two years (1000 to 2000 water jet looms). Unit 4 is currently in expansion phase with 160 water jet looms installed and working. Total cost of additional 1000 water jet looms will come around 350-400 crores: 200 cr capex, 70 cr WC, remaining renewable cost.
Borana currently benefits from two state subsidies: interest and power. As per management, 30% to 40% of the interest cost subsidy and 2 rs per unit of power subsidy. The power subsidy is given for 5 years with current status for each unit are: unit 1 till 2026; unit 2 till 2027; Unit 3 till 2028. Margins will remain intact once these subsidies are over as the balance will come from renewable. Below are the clients of Borana Weaves:

1. GANGA TEX TRENDZ (P) LTD
2. OSWAL INTERNATIONAL
3. NIRANKARI TEXTILES
4. SUDARSHAN SILK MILLS
5. AMBAJI FABRICS
6. VARUN TEXTILE
7. SHRI HARI TEX

Below are the key growth drivers for this industry:

• Rise in demand for athleisure, performance & technical textiles.
• Sustainability: increased demand for rPET / recycled polyester yarns and biodegradable variants.
• Government incentives: e.g. Production Linked Incentive (PLI), quality / standardization schemes.
• Innovation in new yarn types: low shrinkage, high modulus, etc.
• Geopolitical Uncertainties and trade barriers in key markets.

Financials: I am presenting the screener screenshots for P&L, Balance sheet and Cash flow statement.

Borana enjoys EBITDA margins of >20% which is quite good in this industry. I am yet to do the valuations. Will share once I do those calculations along with a bull, base and bear case scenario. Below is the SWOT analysis from recent ppt.

I was going through the latest credit rating by care edge released in Dec 2025. I found a big red flag of non-corporation by the firm.

I tried to find mention of the same in latest concall but none of the analysts asked this question. I am not sure what to make of this other than CG issue. I request forum members to help understand this part. I have attached all the sources at the bottom.
I continue to research on the company and will add more information soon.

Disc: tracking without position

SEBI | Borana Weaves Limited - RHP

Concall Jan 2026.pdf (1.1 MB)

Ratings Dec 2025.pdf (146.9 KB)

AR FY25.pdf (4.0 MB)

ppt Jan 2026.pdf (5.5 MB)

[gaurav]

@satishwe, thank you for approving the thread. I thought of creating this thread now instead of waiting to finish the research which may take long time. Adding details as requested and more.

Lets start with business understanding. Borana weaves (BWL) manufactures unprocessed and unbleached products, grey fabric (or greige fabric) and PTY Yarn. Here, PTY Yarn is the raw material to grey fabric which is a value added product. Hence, company is steadily increasing the share of grey fabric to current 90%. The raw material for PTY Yarn is POY (Polyester Partially Oriented Yarn) which is roughly 61% of revenue. POY prices are stable but they are linked to crude oil prices. There is also a risk of dumping from China but the management has clarified they can compete against chinese players without duty protection due to lower labor costs. The grey fabric is supplied to local clients who use it to make finished products like apparels, home decor, technical textiles. Technical textiles has wide variety of applications in medical bandages, industrial canvas, agro-textiles, protective clothing, and specialized automotive components like airbags and seat covers. Due to the nature of products by BWL they need not do any marketing at all which saves on costs.

Utilization - Company has four manufacturing units. Below is the 9M FY26 utilization of each unit:
unit1 - 76.62%
unit2 - 74.73%
unti3 - 82.94%
unit4 - 78.11%

Blended utilization stands at 82% (as per latest concall). The numbers may appear to fluctuate over time but that is not demand collapse but this is due to the width of machines being utilized based on product requirement. These are healthy levels and going forward slight improvements can be expected once unit4 is fully operational.

Promoters have good experience of financial market as well. Another group company R&B denims is listed since 2014. In 2017 SEBI initiate a regulatory proceeding against the promoters for failure to disclose aggregate shareholding/voting rights of promoters. The case was eventually settled for 2 lakhs and this is the only instance of CG issue I could find in the group company R&B Denims Limited. Promoters have given personal guarantees to the tune of 54 crores to back the facilities.

Care Ratings - I have searched on ‘issuer not cooperating’ by this rating agency. Below is an excerpt from RHP:
The status of the credit ratings issued by CARE Ratings on October 8, 2024 have been marked as “Issuer Not Cooperating” due to the termination of the mandate with CARE Ratings in September 2024. Despite this, CARE Ratings issued a rating in October 2024, categorizing the Company as “Issuer Not Cooperating,” which still remains on their website. Further, our Company had engaged Brickwork Ratings India Private Limited in August 2024 for issuing credit rating in relation to our credit facilities. As of February 11, 2025, Brickwork Ratings India Private Limited has assigned a rating of BWR BBB / Stable to our Company’s credit facilities. However, the ongoing “Issuer Not Cooperating” status by CARE Ratings, despite the termination of their mandate, may adversely affect our Company’s credit perception, investor confidence, and future access to financing on favorable terms

Hence, I would remove this item from the list of red flag. I still don’t understand why the ratings agency would not update with latest information or borana forces them to somehow. Would be grateful if someone with knowledge can help out with this tidbit.

Equipments (avoid this section if information overload) - Most of the high-tech machines required for expansion are sourced from China. These machines include Shuttleless Water Jet Looms, Kaishan Permanent magnet variable frequency low pressure compression screw compressor, Warping Machine, Beaming Machine. Below are the process involved during production of grey fabric and PTY yarn:
(i) Texturizing, which involves heating the POY Yarn, our raw material, to enhance its strength, elasticity and overall texture and appearance to produce PTY Yarn,

(ii) Warping or sectional warping, which is used to convert separate PTY Yarn packages into a warp beam or yearn roll. This is crucial for preparing the yarn for weaving,

(iii) Drawing, which involves a series of steps to straighten the PTY Yarn by passing it through a series of guides and tensioning devices, ensuring uniformity for the next stages,

(iv) Water jet weaving, which involves water jet looms to propel the weft yarn through the warp yarns. These looms consist of a shuttle that is moved by high pressure water jets instead of traditional mechanical shuttle to interlace yarn to create the finished fabric,

(v) Folding, which process is carried out by automated machine, followed by a physical quality checking to ensure it meets the standards. This process results in neatly folded lots, and

(vi) Computerized tagging of the folded lots with important details such as lot number, date of production, length of the fabric and a QR scan code for ensuring efficient tracking and inventory management.

Competition - Borana Weaves has no direct listed peers which makes it difficult to evaluate for reference. Unlisted peers are SAAM Textiles, Paramount textile mills, Madhav fashion and Jaincotex. Few listed indirect peers are Vardhman Textiles and KPR Mills.

Risks - Below are some key risks faced by BWL:

1. Competition - BWL has mouth watering >20% EBITDA margins which itself makes it prone to competition from existing and new players. In my opinion this could be the biggest risk as increased competition may trigger a price war in future squeezing margins.
2. Fluctuations in raw material prices including crude oil affects cost of production.
3. Geographical risk - The company is centered in Surat, Gujarat from raw material suppliers, manufacturing units and clientele. Any adverse regulation from state govt or unforseen mishap will affect the company. Although this is currently proving to be a growth trigger and margin expansion.
4. Rising labor costs can put pressure on margins. Textile manufacturing is most labor intensive sector after agriculture.
5. Environmental regulations - The industry faces growing pressure from environmental regulations aimed at reducing pollution and promoting sustainable practices. Compliance with these regulations often requires substantial investments in cleaner technologies and processes, which can strain financial resources, especially for smaller enterprises. The synthetic textile industry contributes to the growing textile waste problem in India, with a significant portion of synthetic textiles not being biodegradable.
6. Market Demand Fluctuations - Any fluctuation in demand of grey fabric can significantly dent BWL.

Above is not an exhaustive list and you should dyor to find more potential pain points.

Valuation - Honestly, I am not well versed with valuation. I have limited understanding of financials and will use LLMs to do most of the heavy lifting here. Current mcap of BWL is 989 crores. 9M FY26 revenue stands at 288 crore. Assuming Q4 to have similar revenue, EBITDA and PAT of Q3 FY26. EPS is close to 24 and PE ratio of 16. Lets assume 30% of topline growth (Q3 was 42%) and EBITDA margin of 22%. What we have is a company looking to double its capacity in one year and increase margins simultaneously. These are not rich valuations if execution is done correctly. We will do few scenarios to estimate the risk to reward.

Bear Case - ₹260–280. Assumptions:

• Revenue growth slows to 10%

• EBITDA margin falls to 19%

• PAT margin falls to 13%

• Capacity expansion slower

FY28 Revenue ≈ ₹480 crore
PAT margin 13% → PAT ≈ ₹62 crore
EPS ≈ 62 / 2.665 = ₹23

If market gives 12x PE (commodity multiple) – 23×12=₹276

Bear Case Value:

Base Case - ₹520–560. Assumptions:

• Revenue grows 20% CAGR

• FY28 Revenue ≈ ₹570–600 crore

• PAT margin stabilizes at 15–16%

• PAT ≈ ₹90 crore

EPS ≈ 90 / 2.665 = ₹33.7
If market assigns 16x PE: 33.7×16=₹540

Bull Case - ₹900-1000. Assumptions:

• Capacity doubling successful by FY28

• Utilization 85%+

• Renewable savings add 4–5% margin

• PAT margin 17–18%

• Revenue scales to ₹750–800 crore

PAT ≈ ₹130 crore. EPS ≈ 130 / 2.665 = ₹48.7
If market assigns 20x PE (high-growth textile rerating): 48.7×20=₹974

Our downside is 25% and upside is 150%. There can be extreme bear or bull scenario as well but the risk to reward is favorable. I must add BWL is generating good cash from operations and future near term equity dilution is ruled out by the management even for expansion.

Overall, textile industry is poised for growth with gst rate cut, FTAs with EU and other countries, positive govt attitude. This industry will give blue collar jobs as well as generate forex reserves. BWL with its experienced leadership, advanced technology and dominant position should be able to leverage the growth triggers.

Disc: tracking without position. no investment advice DYOR.

[gaurav]

Adding the shareholding breakdown. Promoter>67% with decent FII, DII holding for a 1000 mcap company. IPO lock in has ended and those institutions are off the list.

Disc: Initiated a tracking position. Feels odd to buy at all time high specially after zaggle disappointment but wanted to have some skin in the game. No recommendation dyor

[gaurav]

This marks the very first headwind faced by BW. Will be interesting to see how the management handles it.

Iran Israel War: “India In Comfortable Position, Crude Oil Stock Of 25 Days”: Government Sources https://share.google/O0H1SuHWiEjPbqo9N

Although hopes are for a short term conflict but one can never say for certain. Below is an excerpt I would like to mention for clarity:

The primary raw materials used by the company to manufacture grey fabrics are Partially Oriented Yarn (POY) and Polyester Filament Yarn (PFY) which is the derivative of crude oil and hence the profit margins of the company are susceptible to volatility in the prices of these raw materials. Also, the raw material cost forms 60-70% of the cost structure. The major supplier of the company is Reliance Industries, Garden Silk Mills and others with whom companies like Borana have limited bargaining power. The fragmented nature of the business will limit the ability of the company to pass on changes in raw material prices exposing its profitability to volatile raw material prices.

ACML Capital Markets Limited ACML Capital Markets Limited

I would also like to add current markets are not suitable to fair priced valuation like BW. It is important to look for value as margin of safety.

Disc: invested with a small tracking position recently.