All About Shree Ram Twistex Limited - IPO

24 Feb 2026 , 02:30 PM

Shree Ram Twistex Limited (SRTL) is entering the capital markets as an emerging, energy-efficient cotton yarn manufacturer with a differentiated ESG-led positioning in a traditionally energy-intensive industry. The company has established operational self-sufficiency through a 6.1 MW ground-mounted solar power plant (5 MW commissioned; balance expected by March 2026) and has planned a 4.2 MW captive wind project (expected by December 2026). Together, these renewable initiatives are designed for 100% captive consumption, potentially reducing electricity costs by up to 40%—a key competitive advantage in spinning operations where energy forms a significant cost component.

The IPO is a pure fresh issue, with no Offer for Sale by promoters, indicating capital infusion for growth and alignment with long-term value creation. The proceeds will be utilised to complete renewable energy infrastructure, strengthen working capital, and improve balance sheet flexibility.

Financially, SRTL has demonstrated steady growth, with revenue rising from INR 21,310 lakhs in FY2023 to INR 25,504 lakhs in FY2025 (CAGR ~9.5%). Profitability has improved meaningfully, with PAT increasing nearly fourfold from INR 205 lakhs to INR 799 lakhs, and ROE expanding to 10.8% in FY2025. EBITDA margins remain stable around 8.5–8.7%, broadly in line with industry averages.

Positioned within India’s export-driven textile ecosystem and supported by renewable cost efficiencies, SRTL offers investors exposure to a consolidating cotton yarn industry with ESG credentials. However, the business remains exposed to cotton price volatility and high customer concentration, making execution discipline critical for sustained growth.

About the Company

Shree Ram Twistex Limited operates exclusively in the B2B cotton yarn manufacturing segment with a diversified portfolio:

Key Product Segments:

• Carded Yarn (51.34% revenue contribution) – Core high-volume segment
• Eli Twist Yarn (29.60%)
• Lycra Blended Yarn
• Organic Yarn
• Open-End Yarn
• Cotton Waste

The company benefits from:

• 34-day working capital cycle (vs industry 52–71 days)
• Debt-equity ratio of 0.84 (FY25)
• Strong relationships with top textile manufacturers
• Increasing presence in organic and sustainable yarn
• Its renewable energy integration is a strategic differentiator aimed at stabilising margins in a volatile commodity cycle.

Valuation of the Company

At the upper price band of INR 104:

• FY25 EPS: INR 2.72
• Trailing P/E: ~38x
• NAV per share: INR 23.97
• Implied P/B: ~4.3x

If annualised based on 1HFY26 EPS (INR 4.76), the P/E moderates to ~23x.

Compared to listed textile peers, SRTL commands a premium multiple, justified by:

• Renewable energy integration
• Improving profitability
• Better working capital efficiency

However, margins remain modest relative to high-margin textile players.

Details of the IPO

• Issue Type: Fresh Issue (No OFS)
• Total Issue Size: INR 110.24 crore
• Equity Shares Offered: Up to 10.6 million shares
• Price Band: INR 95 – INR 104
• IPO Open: February 23, 2026
• IPO Close: February 25, 2026
• Book Running Lead Manager: Interactive Financial Services Limited

Industry Outlook

India’s cotton yarn industry, valued at approximately INR 174 billion in FY2024, is projected to grow at a 12.4% CAGR to reach INR 350 billion by FY2030. India is the world’s largest cotton producer (3.8 million tons in FY2024) and the second-largest spinner globally, giving it structural raw material advantages.

Key growth drivers include:

• Government initiatives like the PLI Scheme and PM MITRA Parks

• “China +1” global supply chain diversification

• India’s target of USD 350 billion in textile exports by 2030

• Rising domestic apparel consumption

• Growing preference for natural fibres amid ESG mandates

India’s cotton-to-synthetic fibre ratio (60:40) is significantly higher than global norms, favouring natural fibre players. About 30% of cotton yarn production is exported to Bangladesh, China, and the EU.

However, the industry remains cyclical and sensitive to:

• Cotton price volatility

• Currency fluctuations

• Global demand slowdown

• Trade protectionism

Consolidation is likely as energy-efficient, capital-disciplined players gain share over smaller, inefficient mills.

How the Company is Performing with its Peers

SRTL shows:

• Revenue CAGR (FY23–FY25): ~9–10%

• PAT CAGR: ~98%

• EBITDA margin: ~8.5%

• ROE improved to 10.8%

Compared to peers:

• Lower margins than premium player Ambika Cotton

• Better working capital than many small-cap mills

• More stable than Damodar and Rajapalayam, which faced volatility

Company vs Peers (Top 5)

1. Ambika Cotton Mills Limited
Beats: Growth trajectory, renewable integration
Lacks: Lower EBITDA margin (Ambika ~14–20%), lower ROE

2. Damodar Industries Limited
Beats: Stronger profitability, lower leverage
Lacks: Smaller scale

3. Rajapalayam Mills Limited
Beats: Positive earnings trend
Lacks: Lower scale, thinner margins

4. Industry Mid-sized Exporters
Beats: Renewable energy advantage
Lacks: Customer diversification

5. Larger Integrated Textile Houses
Beats: Nimbleness, lower capital intensity
Lacks: Brand power, vertical integration depth

Comparing P/E and P/B with Peers

Company	P/E	Approx. P/B
SRTL	38x	4.3x
Ambika Cotton	11x	<1x
Damodar Industries	14x	<1x
Rajapalayam Mills	NA	~1.7x

SRTL trades at a premium P/E and P/B versus peers, implying strong growth expectations.

Takeaways from RHP 

• Strong PAT growth over 3 years

• Stable EBITDA margins (~8.5%)

• Renewable energy-led cost advantage

• 34-day working capital cycle

• Debt-equity below 1

Key risks:

• Top customer contributes 62%+ revenue

• Top 5 customers = ~71% revenue

• No long-term cotton supply contracts

• Wind project yet to secure binding EPC agreement

Investment thesis depends on:

• Renewable execution

• Margin expansion beyond industry average

• Customer diversification

Objects of the IPO

• Completion of remaining 1.1 MW solar capacity

• Funding 4.2 MW captive wind project

• Working capital requirements

• General corporate purposes

Pending Tasks / Projects

• Solar plant balance commissioning (March 2026)

• Wind project execution (December 2026 target)

• Scaling organic and open-end yarn segments

Listing Gains or Long-Term Gains?

Listing Gains:
Given premium valuation (35–38x P/E), short-term listing gains may depend on subscription momentum rather than fundamentals.

Long-Term Gains:
More suited for long-term investors seeking:

• Export-led textile exposure

• ESG-aligned manufacturing

• Margin improvement via renewable energy

Dividend payout currently limited due to capex focus; capital appreciation likely to be primary return driver rather than dividend yield.

Shree Ram Twistex represents a small-cap, ESG-focused textile play with improving financial metrics and renewable integration advantages. While valuation appears rich relative to peers, long-term potential hinges on successful renewable execution and margin sustainability in a cyclical industry.