Spunweb Nonwoven NSE SME IPO review (Apply)

•    The company is a leading player in spunbonded nonwoven fabrics that has variety of uses and has high demand globally.
•    The company marked growth in its top and bottom lines.
•    Boosted bottom lines for FY25 is attributed to utilization of higher capacities, value added product launch and cost management.
•    Based on FY25 earnings, the issue appears fully priced. 
•    Counter may witness first-mover fancy post listing.
•    Investors may park funds for medium to long term.

ABOUT COMPANY:
Spunweb Nonwoven Ltd. (SNL) along with its wholly owned subsidiary, Spunweb India Private Limited (“SIPL”), are engaged in the business of manufacturing of polypropylene spunbonded nonwoven fabrics primarily used in industries such as hygiene, healthcare, packaging, agriculture and others (including roofing & construction, industrial and home furnishing). It is one of the largest manufacturers in spunbonded nonwoven fabric industry in India, with an installed production capacity of 32,640 MT as of FY24 (Source: CareEdge Report). Its product portfolio consists of hydrophobic nonwoven fabric, hydrophilic nonwoven fabric, super soft nonwoven fabric, UV treated fabric, antistatic nonwoven fabric and FR treated fabric in the width of 1.6m, 2.6m and 3.2m with the range of 7 to 150 grams per square metre (“GSM”). These products are available in more than 20 colours and they can be customized in colour with value-added services such as varied coatings, slitting, printing, sheet cutting and wider width fabrics. 

The company is also engaged in supply of various types of nonwoven fabric bags. SNL is ISO 9001:2015 certified which ensures the products manufactured by it are reliable and consistent in quality. Its customers include manufacturers of hygiene products viz. diapers, sanitary pads and under pads, manufacturers of healthcare products viz., face masks, PPE kits, surgical gowns and other medical disposable products. SNL’s customers also include manufacturers of packaging products viz. shopping bags, grocery bags, suit cover bags and manufacturers of agricultural products viz. fruit cover and crop cover. Some of its customers include names such as RGI Meditech Private Limited, Millenium Baby cares Limited, Sekhani Industries Private Limited, Myra Hygiene Products Private Limited, Rotech Healthcare Private Limited, Poligof Micro Hygiene (India) Private Limited, Salus Products Private Limited, Kwalitex Healthcare Private Limited, JDS Nonwoven, Vyom Nonwoven, among others.

The company manufactures, markets and sells products in domestic as well as international markets. In domestic market, it has catered to more than 400, 450, and 485 customers during Fiscal 2023, Fiscal 2024 and Fiscal 2025. In the international market, the company has catered to more than 15, 20, and 20 customers during Fiscal 2023, Fiscal 2024 and Fiscal 2025, respectively, who are based in countries such as the United States of America, United Arab Emirates, Italy, Egypt, Saudi Arabia, Sri Lanka, Nepal, Kenya and Nigeria. As of May 31, 2025, it had 199 employees on its payroll and 51 employees on its subsidiary payroll. It also employs contract workers as and when needed.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 6351600 equity shares of Rs. 10 each to mobilize Rs. 60.98 cr. at the upper cap. It has announced a price band of Rs. 90 – Rs. 96 per share. The issue opens for subscription on July 14, 2025, and will close on July 16, 2025. The minimum number of shares to be applied is for 2400 shares and in multiples of 1200 shares, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.35% of the post-IPO paid-up capital of the company. From the net proceeds of the fresh equity shares, it will utilize Rs. 29.00 cr. for working capital, Rs. 10.00 cr. investment in wholly owned subsidiary SIPL, Rs. 8.00 cr. for repayment of certain borrowings, and the rest for general corporate purposes. 

The IPO is solely lead managed by Vivro Financial Services Pvt. Ltd., and MUFG Intime India Pvt. Ltd., is the registrar to the issue. Rikhav Securities Ltd. is a market maker. Vivro Financial Services Pvt. Ltd. is also a syndicate member.

Having issued initial equity shares at par value, the company has issued further equity shares at a fixed price of Rs. 111.78 per share in December 2024. It has also issued bonus shares in the ratio of 13 for 20 in January 2025. The average cost of acquisition of shares by the promoters is Rs. 13.49, and Rs. 16.18 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 17.75 cr. (17751809 equity shares) will stand enhanced to Rs. 24.10 cr. (24103409 equity shares). Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 231.39 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 117.68 cr. / Rs. 1.13 cr. (FY23), Rs. 154.24 cr. / Rs. 5.44 cr. (FY24), Rs. 227.14 cr. / Rs. 10.79 cr. (FY25). 

As per proforma condensed and combined statement of profit and loss account statement as of March 31, 2025, it earned a net profit of Rs. 14.91 cr. on a total income of Rs. 266.36 cr. (Refer page no. 282 – 283 of the offer document).

For the last three fiscals, the company has reported an average EPS of Rs. 4.32 and an average RoNW of 24.80%. The issue is priced at a P/BV of 3.95 based on its NAV of Rs. 24.31 as of March 31, 2025, and at a P/BV of 2.22 based on its post-IPO NAV of Rs. 43.20 per share (at the upper cap). 

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 21.43. Based on FY24 earnings, the P/E stands at 42.48. Based on proforma earning statement for FY25, its P/E stands at 15.51. The issue relatively appears fully priced. 

According to the management, with its product range and cost management, it has posted good earnings for FY25 and the trends will be maintained with up the sleeve additional capacities and over 25 + new value-added products launch in coming years. It enjoys niche place in spunbonded non-woven fabrics which finds huge demand for various hygiene and health related products.

For the reported periods, the company has posted PAT margins of 0.96% (FY23), 3.53% (FY24), 4.75%, (FY25), and RoCE margins of 7.30%, 11.55%, 33.66%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has adopted a dividend policy in January 2025, based on its financial performance and future prospects.

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

MERCHANT BANKER’S TRACK RECORD:
This is the 6th mandate from Vivro Financial in the last three fiscals including the ongoing one.  From the last 5 listings, 1 listed at discount, and the rest with a premium ranging from 43.98% to 99.46%, on the listing date.