Sihora Ind. BSE SME IPO review (Not Rated)

•    The company is engaged in the business of manufacturing and marketing of narrow woven fabrics, digitally printed narrow fabrics, woven labels, tapes etc.
•    It provides solutions for all technical textiles, fashion fabrics and industrial sector requirements.
•    Based on its recent financial data, the issue appears aggressively priced.
•    It is operating in a highly competitive and fragmented segment.
•    There is no harm in skipping this pricey and dicey “High Risk/No Return” bet.

PREFACE:
This IPO is opening and its offer document is dated October 06, 2025, but the same was uploaded on BSE (the designated exchange) only this day post noon, i.e., October 09, 2025. Aren’t, the regulatory body, exchange authorities, lead manager and promoters are not answerable for such deliberate delay in putting offer documents?

ABOUT COMPANY:
Sihora Industries Ltd. (SIL) is engaged in the business of manufacturing and sale of narrow woven fabrics, lace, digitally printed narrow fabrics, woven labels, tapes, zippers, elastics and other textile products, including technical textiles, for use in fashion and industrial sectors.

Its operations are headquartered in Surat, Gujarat, which is a textile manufacturing hub. SIL’s business integrates technology with traditional manufacturing processes for apparel clients, proprietary brands, and contract customers. It manufactures customizable products for brands, retailers, wholesalers, and end consumers.

The Company was originally incorporated as Sihora Industries Private Limited on August 10, 2023, under the Companies Act, 2013, with the intent to take over the operations of Sihora Narrow Fabrics, the sole proprietorship of Promoter. The takeover of business was completed on October 17, 2023. Subsequently, the Company was converted into a public limited company pursuant to a special resolution passed on June 12, 2024, and a fresh Certificate of Incorporation dated July 17, 2024, was issued by the RoC, Ahmedabad.

The Company operates an integrated textile manufacturing facility located in Surat, Gujarat, which undertakes end-to-end textile manufacturing processes, including yarn processing, weaving, digital printing, embroidery, dyeing, and finishing. The facility includes infrastructure for digital printing (reactive and sublimation), weaving through rapier looms and needle looms, electronic jacquard weaving and standard finishing processes. The integration of multiple manufacturing processes at a single location enables the Company to supply products to customers engaged in both branded and non-branded businesses.

The presence of multiple production functions within one facility assists in minimizing production delays, ensuring quality compliance, and supporting cost and process efficiencies. This structure also facilitates the execution of varied customer requirements and adherence to delivery timelines. As of July 31, 2025, it had 67 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 1600000 equity shares of Rs. 10 at a fixed price of Rs. 66 per share to mobilize Rs. 10.56 cr. IPO opens for subscription on October 10, 2025, and will close on October 14, 2025. The minimum application to be made is for 4000 shares and in multiple of 2000 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 30.03% of post-IPO paid-up equity capital of the company. The company is spending Rs. 0.93 cr. for this IPO proceeds, and from the net proceeds of the issue, the company will utilize Rs. 3.50 cr. for working capital, Rs. 2.00 cr. for capex on purchase of plant and machineries, Rs. 2.58 cr. for repayment/prepayment of certain borrowings, and Rs. 1.55 cr. for general corporate purposes.

The IPO is solely lead managed by Sobhagya Capital Options Pvt. Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. Aftertrade Broking Pvt. Ltd. is the market maker.

The company has issued initial equity shares at par value, and issued further equity shares at a fixed price of Rs. 150 per share between January 2024 – February 2024, also issued bonus shares in the ratio of 9 for 2 in February 2025. The average cost of acquisition of shares by the promoters is Rs. 0.28, and Rs. 10.05 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 3.73 cr. will stand enhanced to Rs. 5.33 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 35.16 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 12.10 cr. / Rs. 0.30 cr. (FY23), Rs. 11.62 cr. / Rs. 0.60 cr. (two broker periods of FY24), Rs. 15.06 cr. / Rs. 1.87 cr. (FY25). For 5M of FY26 ended on August 31, 2025, it earned a net profit of Rs. 0.45 cr. on a total income of Rs. 5.86 cr. Thus, in a pre-IPO year, it posted rosy financial data which is perhaps for fetching fancy valuations.

For the last three fiscals, the company has reported an average EPS of Rs. 2.48, and an average RoNW of 60.34%. The issue is priced at a P/BV of XX based on its NAV of Rs. 14.11 as of March 31, 2025, but its NAV data as of August 31, 2025, and post-IPO NAV data is missing from the offer documents.  

If we attribute its FY26 super annualized earnings on post-IPO expanded equity base, then the asking price is at a P/E of 32.84, and based on its FY25 earnings, the P/E stands at 18.75. Thus, the issue appears fully priced.

The company has posted PAT margins of 2.48% (FY23), 5.15% and 5.17% (for two broken periods 0f FY24), 12.86% (FY25), 7.71% (5M-FY26), and RoCE Margins of 30.57%, 25.06% and 16.47%, 31.93%, 9.95%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORDS:
This is the 2nd mandate from Sobhagya in the ongoing fiscal. The only 1 listing so far, it opened at a discount. The LM has a poor track record.