Sonaselection India is an integrated fabric manufacturing and processing company engaged in the production of value-added textile products. It manufactures 100% cotton fabric, cotton lycra (stretch) fabric, cotton blends and polyester blends, and undertakes processing of 100% cotton, cotton blends, polyester-viscose (P/V) and polyester fabrics.

The company transitioned from a job-work based processing model to a manufacturing-led model after acquiring an established textile processing unit in 2022 and subsequently commissioned a cotton fabric processing plant in July 2024.

The company‘s manufacturing facility is in Bhilwara, Rajasthan, spread across approximately 49,540 sq. metres, with an installed processing capacity of 82.44 million metres per annum. The facility is equipped with modern textile processing machinery and undertakes key processes including bleaching, dyeing and finishing.

The company follows an integrated operating model combining own manufacturing and job-work processing, enabling it to manage processing activities, quality control, grading, packing and outbound logistics while serving customers according to their technical and product specifications.

The company has set up a rooftop solar power plant for captive consumption to reduce its electricity expenses and as of March 31, 2026, the aggregate installed capacity of its rooftop solar plant stood at 1.20 MW.

The company‘s product portfolio primarily comprises 100% cotton fabrics, cotton lycra (stretch) fabrics, cotton blends and polyester blends, catering to varied apparel and textile applications. It also undertakes processing of greige fabric supplied by customers on a job-work basis.

The company recently diversified into readymade garments through its subsidiary incorporated on July 1, 2025.

Object of the offer

The IPO is entirely a fresh issue of shares worth Rs 141.57 crore at upper price band of Rs 99. There is no OFS component. At the upper end of the price band, the company is expected to be valued at Rs 562.6 crore post listing.

The funds raised to the tune of Rs 80.0 crore will be used towards repaying certain borrowings; Rs 50.61 crore will be utilized towards funding of capital expenditure towards purchase of plant and machineries.The company has an installed capacity of 82.44 million meters per annum for fabric manufacturing and capacity utilization stood at 82.71% in FY2026. The CAPEX is primarily to modernize the plant and there will not be any increment in the overall production capacity of the company pursuant to the installation of the proposed machinery. The balance is towards general corporate purposes.

Strengths

Strategically located manufacturing facility with modern technologies to support its product portfolio.

Strong standing relationships with customers with high retention rate. In FY2026, 20.14% of the company’s revenues were from such customers who have been associated with it for at least three reporting periods.

Experienced promoters supported by a professional management team. Promoter and chairman, Subhash Chandra Nuwal, has over 30 years of experience in the textile sector.

Weaknesses

Operations are concentrated in one manufacturing facility in Bhilwara, posing risks in case of disruption or shutdown.

A significant portion of procurement (96.01% in FY2026) remains concentrated in Rajasthan. Additionally, substantial procurement is sourced from related party Sona Style Limited.

The textile industry is highly fragmented due to low entry barriers such as limited capital and technology requirements; the consequent intense competition amid little differentiation in end products will continue to constrain scalability, pricing power and profitability.

The business remains exposed to cotton and synthetic yarn price volatility, and demand for fashion and apparel fabrics can be cyclical.

The company recorded negative operating cash flows in FY2025 and FY2026, which may impact its ability to meet operating expenses and service debt without external financing.

The company has faced delays in filing statutory forms with the Registrar of Companies, leading to adjudication applications. Also, there are certain instances of delays in payment of statutory dues

The company is subject to stringent quality requirements from its buyers. Any failure to meet prescribed quality specifications may result in product rejections, loss of customer confidence, and reputational damage.

As on July 31, 2026, an aggregate of Rs 263.84 crore was outstanding towards loans availed from banks under various financing arrangements, which could limit its flexibility in managing its business or using its cash and other assets. Leverage was high with Debt/Equity ratio at 2.48x as on March 31,2026.

Valuation

Consolidated sales were up by 63.6% to Rs 516.95crore in FY2026.Revenue growth was on account of established customer base, improved market penetration and the addition of new clients. OPM contracted from 18.23% to 16.27%, leading to a 46% increase in operating profit to Rs 84.13crore. Other income inclined 10.2% to Rs 25.9 crore. Interest cost inclined 20.1% to Rs 17.69 crore and depreciationcost inclined by9.9% to Rs 19.03crore. PBT was higher by 84.2% to Rs 48.05 crore as against Rs 26.02crore.PAT was higher by 83.3% to Rs 34.02crore as against Rs 18.56 crore in FY2025.

At the higher price band of Rs 99, the offer is made at a P/E of 16.54 times FY2026 EPS (of Rs 6).

As of March 31, 2026, total consolidated borrowings of the company stood at Rs 258.24 crore (as of July 31,2026, total consolidated borrowings stood at Rs 263.84 crore). The company proposes to pay off Rs 80.0 crore of the borrowings from the net proceeds from fresh issue. Repayment of the borrowings will reduce the interest cost. The EPS for FY26 works out to Rs 6.7 if its interest cost is reduced, keeping all other items, including tax rate, same. The re-worked P/E at the upper price band moderates to 14.84 times of its FY26 EPS

Listed peers are Nitin Spinners, Vishal Fabrics, Sangam India and Vardhman textiles. Nitin Spinners trades at 17.1times TTM P/E, Vishal Fabrics trades at 14.8 times TTM P/E,Sangam India trades at 22.9 times TTM P/E and Vardhman Textiles trades at 19.4 times TTM P/E. The OPM and ROE stood at 16.27% and 39.05%, respectively, in FY26. These were 14.0% and 12.8% for Nitin Spinners, 7.0% and 5.79% for Vishal Fabrics, 10.0% and 8.7% for Sangam India, and 13.0% and 6.86% for Vardhman Textiles, respectively.