Siddhi Cotspin Makes Poor Debut with 23.98% Discount, Lists at ₹82.10 Against Weak Subscription

Siddhi Cotspin Limited, the cotton yarn manufacturer, made a poor debut on NSE SME on September 26, 2025. After closing its IPO bidding between September 19-23, 2025, the company commenced trading with a significant 19.81% discount opening at ₹86.40 and declining to ₹82.10 with losses of 23.98%, reflecting very weak investor sentiment towards the textile sector amid lukewarm subscription response.

Siddhi Cotspin Listing Details

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Siddhi Cotspin Limited launched its IPO at ₹108 per share with a minimum investment of 2,400 shares costing ₹2,59,200. The IPO received a weak response with a subscription of just 4.21 times - retail investors at a disappointing 1.50 times, NII at a moderate 5.94 times, and QIB at a strong 17.53 times, indicating limited investor interest with particularly poor retail participation in the cotton yarn manufacturing business.

First-Day Trading Performance Outlook

• Listing Price: Siddhi Cotspin share price opened at ₹86.40, representing a discount of 19.81% from the issue price of ₹108, and declined further to ₹82.10, delivering substantial losses of 23.98% for investors, reflecting extremely negative market sentiment.

Growth Drivers and Challenges

Growth Drivers:

• Diversified Product Portfolio: Comprehensive range of value-added cotton yarns, including Compact Carded and Combed Hosiery, Compact Weaving Yarns, Eli Yarns, Slub and Siro Slub Yarn, and Lycra-Core Spin Yarn serving diverse textile manufacturing segments.
• Operational Efficiency: Modern manufacturing facility in Dholi, Ahmedabad, with 29,376 spindle capacity producing 90,11,850 kgs of cotton yarn annually, equipped with advanced automated machinery ensuring high productivity and quality.
• Strong Customer Relationships: Established long-term relationships with textile manufacturers, garment exporters, and distributors, providing business stability and recurring order patterns.

Challenges:

• Very Poor Market Reception: Disastrous listing performance with a 23.98% discount and weak subscription of 4.21 times reflecting severe investor scepticism about valuation, business prospects, and sector fundamentals.
• Thin Profit Margins: Low PAT margin of 1.81% and modest EBITDA margin of 4.54% indicating a limited profitability cushion and vulnerability to cost pressures in the competitive textile market.
• High Competitive Pressure: Operating in a highly competitive and fragmented cotton yarn segment with numerous players affecting pricing power, market share retention, and margin sustainability.

Utilisation of IPO Proceeds

• Working Capital Enhancement: ₹25.10 crore for funding working capital requirements supporting inventory management, raw material procurement, and operational scaling in cotton yarn manufacturing.
• Debt Reduction: ₹8.97 crore for repayment and prepayment of outstanding borrowings, improving financial leverage and reducing interest costs from current debt levels.
• General Corporate Purposes: Supporting business operations, strategic initiatives, and expansion activities for long-term competitiveness in the textile market.

Financial Performance of Siddhi Cotspin

• Revenue: ₹724.66 crore for FY25, showing solid growth of 25% from ₹581.18 crore in FY24, reflecting steady demand for cotton yarns and successful business execution.
• Net Profit: ₹13.08 crore in FY25, representing modest growth of 7% from ₹12.18 crore in FY24, indicating operational challenges and margin pressure in a competitive market environment.
• Financial Metrics: Moderate ROE of 17.95%, solid ROCE of 14.88%, manageable debt-to-equity ratio of 0.84, thin PAT margin of 1.81%, modest EBITDA margin of 4.54%, and estimated market capitalisation of ₹200.38 crore.