Shree Ram Twistex IPO Review: Apply or Avoid?

Shree Ram Twistex Ltd makes cotton yarn, basically the thread that later becomes fabric for jeans, towels, and t-shirts, and it also makes stretch yarn by blending cotton with Lycra (a fibre that adds “stretch”). The company’s IPO runs from 23-25 Feb 2026 at ₹95-₹104 per share.

In this blog, we will break down how the business earns money, where the IPO money will go (working capital, solar, wind, debt), what looks strong, what can go wrong, how it compares with peers, and whether the pricing looks fair for a cotton-yarn business.

IPO Overview

• IPO Date: 23 to 25 Feb, 2026
• Total Issue Size: ₹110.24 crore
• Price Band: ₹95 to ₹104 per share
• Minimum Investment: ₹14,976
• Lot Size: 144 Shares
• Tentative Allotment Date: Feb 26, 2026
• Listing Date: Mar 2, 2026 (Tentative)

How Shree Ram Twistex Makes Money

• It buys raw cotton, then “spins” it into yarn and sells it to factories. It purchases cotton in bulk (mainly in harvest months), cleans it, combs it, and twists it into yarn on high-speed spindles, then ships big lots to fabric processors and garment players.
• It makes both regular cotton yarn and value-added stretch yarn. The stretch yarn is cotton mixed with Lycra (elastic fibre), used in products like fitted clothing and activewear; this can help pricing, but demand still follows the textile cycle (when fabric demand is weak, yarn demand also slows).
• Scale and machine use matter a lot in yarn. Its plant capacity is 9,855 MTPA and it ran ~87% capacity in H1 FY26; higher utilisation usually helps because fixed costs (staff, maintenance) get spread over more production units.
• Cash gets stuck in cotton inventory, so working capital is key. Working capital (money needed for day-to-day needs like inventory and buyer credit) is heavy here because cotton purchases are large; raw material purchases were ₹168.9 crore in FY25, about 66.23% of revenue, so small cotton price moves can quickly hit margins.

Objectives of the IPO

• Working capital: ₹44 crore. This money is meant for day-to-day running needs over the next two years, mainly to buy cotton bales in bulk during the season and manage the gap between paying suppliers and collecting from customers.
• Wind power: ₹39 crore for 4.2 MW. The company plans a wind power project to reduce dependence on grid electricity and protect itself from power tariff (electricity rate) ups and downs, because spinning is power-hungry.
• Solar power: ₹7.35 crore for a 6.1 MW plant (total cost ₹22.24 crore). Part of the solar project is funded by a bank loan, and the company has already completed and started 5 MW, so the capex is partly underway, not just a plan on paper.
• Debt repayment: ₹14.89 crore. As of 30 Sept 2025, borrowings were ₹60.70 crore; using IPO funds to repay a part of this should reduce interest cost. The remaining amount will be allocated to general corporate purposes.

Strengths:

• Growing sales and profits: Revenue rose from ₹213.58 crore (FY23) to ₹256.32 crore (FY25), while net profit rose from ₹2.05 crore to ₹8 crore; that means profit grew much faster than sales, which is good, but also raises the question of how repeatable these margins are in a cyclical sector.
• A better cash cycle reduces stress: Cash conversion cycle improved from 71 days (FY24) to 34 days (FY25), meaning cash stayed “stuck” for fewer days before returning through sales collections, which usually lowers day-to-day borrowing pressure.
• High utilisation and renewable power capex: Capacity utilisation was 87% in H1 FY26 (up from 70% in FY23), and it spent ₹14.77 crore on grid electricity in FY25, which is why now it's focused on renewable power, so solar and wind can meaningfully reduce a major cost line if execution goes as planned.

Risks:

• Customer concentration is very high: In FY25, the top 10 customers made up 85.98% of revenue (₹217.16 crore), and the single largest customer was 32.97% (₹83.26 crore); if even one large buyer cuts orders, the sales line can feel it immediately.
• Raw cotton and textile cycle risk is central to this business: Raw material purchases were ₹168.9 crore in FY25 (66.23% of revenue), so cotton price spikes can squeeze profits, and cotton yarn demand can drop when global textile demand slows (a common concern in this cycle).
• Geographic and supplier concentration raise shock risk: The only factory and registered office are in Gujarat, so any local disruption can pause the full business; also, the top 5 suppliers were 73.31% of purchases (₹113.94 crore), so supply or price shocks can affect the books.

For detailed information, visit Shree Ram Twistex’s official IPO page at INDmoney.

Peer Comparison

Source: RHP, internal calculation

• Size (revenue): Shree Ram Twistex did ₹255.04 crore in revenue in FY25 versus Ambika Cotton Mills ₹702.07 crore, Damodar Industries ₹421.43 crore, and Rajapalayam Mills ₹898.48 crore, so it is playing at a smaller table right now.
• Operating margin: FY25 EBITDA margin was 8.57%, meaning it kept about ₹8.57 of operating profit for every ₹100 of sales; Ambika was 14.72% (₹14.72 per ₹100), while Damodar was 4.50%.

Financial Performance

Revenue increased from ₹213.58 crore (FY23) to ₹256.32 crore (FY25), mainly due to higher sales volume (more yarn sold). Net profit improved from ₹2.05 crore (FY23) to ₹8 crore (FY25), and the company attributes this jump to higher revenue plus lower depreciation (depreciation is an accounting cost for asset wear-and-tear, and lower depreciation can lift reported profit even if cash flow is unchanged).

Profitability ratios improved too: net profit margin moved from 0.96% (FY23) to 3.14% (FY25). In H1 FY26, it reported ₹132.27 crore revenue and ₹7 crore net profit, with net profit margin at 5.3% and EBITDA margin at 12.9%, which looks strong, but in textiles, investors should check if this is a “good part of the cycle” or a stable long-term level.

IPO Valuation

At a price of ₹104, the IPO is valued at a post-IPO P/E of 29.69x based on annualised H1 FY26 earnings, which means investors are paying about ₹29.69 for every ₹1 of yearly profit (based on that run-rate), with a market cap of ₹415.7 crore. At the same time, a peer like Ambika Cotton Mills is at 11.37x P/E, so the gap is large for a business that is still a cotton-yarn maker exposed to cotton prices and the textile cycle. Because the issue is a 100% fresh issue (no OFS), the positive is that the money goes into working capital, renewables capex, and some debt reduction; these can improve cost and stability, but the current pricing already assumes things will go quite well.

Analyst View

This IPO is about a cotton yarn spinner trying to use IPO money to fix two real pain points - high working capital needs and high power costs, plus it will repay a part of the debt. Those are sensible uses of funds in a power-heavy manufacturing business, and the recent margin improvement and faster cash cycle are positives.

The hard part is the price. At 29.69x P/E, you are paying a “high certainty” valuation for a business that still has big uncertainty drivers: cotton prices (raw material is ~66% of revenue), customer concentration (top 10 = ~86% of revenue), and a single-location Gujarat footprint. In my view, there is no harm in skipping a pricey and cycle-linked offer like this unless you have a very high conviction that margins stay elevated and renewable projects translate into a durable cost advantage.

For a seamless application process, visit the INDmoney IPO page.

Disclaimer

Source: Shree Ram Twistex's RHP. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Please be informed that merely opening a trading and demat account will not guarantee investment in securities in the IPO. Investors are requested to do their own independent research and due diligence before investing in an IPO. Please read the SEBI-prescribed Combined Risk Disclosure Document prior to investing. This post is for general information and awareness purposes only and is nowhere to be considered as advice, recommendation, or solicitation of an offer to buy or sell, or subscribe for securities. INDstocks is acting as a distributor for non-broking products/services such as IPO, Mutual Fund, and Mutual Fund SIP. These are not exchange-traded products. All disputes with respect to the distribution activity would not have access to the Exchange investor redressal forum or the Arbitration mechanism. INDstocks Private Limited (formerly known as INDmoney Private Limited) does not provide any portfolio management services, nor is it an investment adviser. Logos above are the property of respective trademark owners, and by displaying them, INDstocks has no right, title, or interest in them. SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500, Research Analyst Registration No. INH000018948 BSE RA Enlistment No. 6428.