Rachit Prints IPO Makes Poor Debut with 20% Discount, Failing to Meet Market Expectations

Rachit Prints Limited, the specialty fabric manufacturer for the mattress industry, made a disappointing debut on BSE SME on September 8, 2025. After closing its IPO bidding between September 1-3, 2025, the company commenced trading with a significant 20% discount at ₹119.20, falling well below the issue price of ₹149 and reflecting weak investor confidence in the specialty textile manufacturing sector.

Rachit Prints Listing Details

Rachit Prints IPO started trading at ₹149 per share with a minimum investment of 2,000 shares costing ₹2,98,000. The IPO received a weak response with a subscription of only 1.97 times - retail investors leading at 2.74 times, NII at 1.25 times, and QIB at just 1.00 times, indicating poor institutional confidence and limited overall investor interest in the mattress fabric business.

First-Day Trading Performance Outlook

Listing Price: The Rachit Prints share price opened at ₹119.20 on BSE SME, representing a discount of 20% from the issue price of ₹149, delivering significant losses for investors and falling well short of market expectations.

Growth Drivers and Challenges

Growth Drivers:

• Strong Financial Performance: Revenue increased by 13% to ₹41.78 crore in FY25 with PAT surging 125% to ₹4.56 crore, reflecting improved operational efficiency and demand for specialty mattress fabrics.
• Outstanding Profitability Metrics: Exceptional ROE of 51.34%, strong ROCE of 29.61%, healthy PAT margin of 10.94%, and solid EBITDA margin of 17.33% indicating superior operational performance.
• Established Client Base: Manufacturing for recognized brands like Sleepwell, Kurlon Enterprises, and Prime Comfort Products providing steady revenue streams and market credibility.
• Diversified Product Portfolio: Comprehensive range including knitted, printed, warp knit, and flame-resistant fabrics along with binding tape serving various mattress industry requirements.

Challenges:

• Poor Market Reception: Significant 20% discount at listing indicates severe investor concerns about business prospects, growth sustainability, and competitive positioning in the textile sector.
• Profit Sustainability Concerns: Sudden 125% jump in profits raises questions about consistency and repeatability of such exceptional performance in the competitive textile manufacturing market.
• Fragmented Market Environment: Operating in highly competitive and fragmented specialty textile segment with pricing pressures and technology advancement requirements.
• Limited Scale Operations: Small revenue base of ₹41.78 crore and compact equity base potentially restricting growth opportunities and competitive positioning against larger players.

Utilisation of IPO Proceeds

• Working Capital Requirements: ₹9.50 crore for working capital needs supporting specialty fabric manufacturing operations and business expansion.
• Capacity Expansion: ₹4.40 crore for capital expenditure towards purchase of plant and machinery enhancing production capabilities and manufacturing capacity.
• Debt Reduction: ₹1.32 crore for partial prepayment of term loans improving capital structure and reducing financial leverage.
• General Corporate Purposes: Remaining funds for general corporate purposes supporting business operations and strategic initiatives.

Financial Performance of Rachit Prints

Revenue: ₹41.78 crore for FY25, showing steady growth of 13% from ₹37.11 crore in FY24, reflecting consistent demand for specialty mattress fabrics. Net Profit: ₹4.56 crore in FY25, representing exceptional growth of 125% from ₹2.03 crore in FY24, indicating substantial operational improvements though raising sustainability questions. Financial Metrics: Outstanding ROE of 51.34%, strong ROCE of 29.61%, moderate debt-to-equity ratio of 0.75, solid RoNW of 37.06%, healthy PAT margin of 10.94%, robust EBITDA margin of 17.33%, high Price to Book Value of 4.24, and market capitalisation of ₹73.55 crore.