Cedaar Textile Disappoints on Listing Day, Down 15% Despite Grey Market Hype

The yarn manufacturing specialist, Cedaar Textile Limited, made a disappointing debut on the NSE SME platform on July 7, 2025. After closing its IPO bidding between June 30 - July 2, 2025, the company commenced trading with a significant 15% discount to its issue price, substantially underperforming grey market expectations and reflecting weak investor sentiment towards the textile manufacturing sector. 

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Cedaar Textile IPO Listing Details

Cedaar Textile Limited launched its IPO at ₹140 per share with minimum investment of 1,000 shares costing ₹1,40,000. The IPO received moderate response with subscription of 12.26 times - QIB segment leading at 37.88 times, retail at 9.73 times, and NII at modest 5.04 times, demonstrating mixed investor sentiment across categories.

Listing Price:  The Cedaar Textile share price opened at ₹119 on NSE SME on July 7, 2025, representing a discount of 15% from the issue price of ₹140, substantially underperforming grey market expectations of 7% premium.

First-Day Trading Performance Outlook

Cedaar Textile IPO experienced weak debut performance with significant discount despite moderate subscription levels, reflecting investor scepticism about valuation and business sustainability. The company, incorporated in 2020, specialises in manufacturing diverse yarns including melange, solid top-dyed, and grey fancy yarns, serving domestic and international markets with 583 employees and established clientele including top-tier customers supplying garments to renowned fashion brands.

Utilisation of IPO Proceeds

• Solar Installation: ₹8.00 crore for installation of grid-tied solar PV rooftop system for captive power generation to reduce operational costs
• Machine Modernisation: ₹17.00 crore for modernisation of machines to enhance production efficiency and product quality
• Working Capital: ₹24.90 crore for meeting working capital requirements to support business operations and growth initiatives
• General Corporate Purposes: Remaining funds for strategic initiatives and issue expenses

Growth Drivers and Challenges

Growth Drivers:

• Diversified Product Portfolio: Comprehensive yarn manufacturing capabilities including melange, solid top-dyed, and grey fancy yarns serving household textiles, woven goods, and hosiery markets
• Established Client Base: Strong relationships with top-tier domestic and international customers supplying garments to renowned fashion brands ensuring recurring business
• Manufacturing Infrastructure: Well-equipped production facilities with experienced workforce of 583 employees and scalable business model
• Market Position: Established presence in quality melange yarn manufacturing with growing customer base and consistent operational capabilities

Challenges:
 

• Catastrophic Listing: 15% discount validates severe market concerns about aggressive pricing and business sustainability in competitive textile sector
• Revenue Inconsistency: Analyst highlights inconsistency in financial performance with revenue volatility across reporting periods raising sustainability concerns
• High Debt Levels: Extremely high debt-to-equity ratio of 5.79 indicating heavily leveraged operations requiring careful financial management
• Aggressive Pricing: Issue appears aggressively priced discounting near-term positives, as confirmed by poor listing performance
   

Financial Performance of Cedaar Textile IPO

• Revenue: ₹113.91 crore for 9M FY25, showing decline from ₹191.01 crore in FY24, reflecting challenging market conditions and operational issues
• Net Profit: ₹7.06 crore in 9M FY25, representing decline from ₹11.05 crore in FY24, indicating margin pressure and operational challenges
• Financial Metrics: High ROE of 56.06%, moderate ROCE of 26.90%, concerning debt-to-equity of 5.79, modest PAT margin of 5.83%, and EBITDA margin of 15.19%

Cedaar Textile's disappointing listing performance with 15% discount reflects significant market concerns about aggressive valuation and operational challenges in the competitive textile manufacturing sector.