Borana Weaves shares hit 5% upper circuit after listing at 12.5% premium: Should you buy, sell or hold?

Borana Weaves IPO

The shares of Borana Weaves debuted at Rs 243 apiece on stock exchanges BSE and NSE on May 27. This implies a premium of 12.5 percent over the IPO price of Rs 216 per share.

Notably, the listing premium is lower than the 19.91 percent grey market premium with which unlisted shares of the company were trading in the grey market, ahead of their official market debut, according to data on Investorgain.

After the market debut, the stock jumped 5 percent to get locked in the upper circuit at Rs 255.15 apiece. This marks a rise of over 18 percent from the IPO price.

The stock debuted on the exchanges with a market capitalisation of nearly Rs 670 crore.

The Rs 145-crore IPO saw strong investor interest during its three days of bidding, being subscribed a whopping 149 times between May 20-22. Non-institutional investors took the lead in the subscription rally by booking their reserved portion nearly 237 times. Retail investors followed closely by subscribing their reserved portion by over 200 times. The portion reserved for Qualified Institutional Buyers (QIBs) meanwhile was subscribed over 87 times.

Borana Weaves' IPO solely comprised a fresh issue of 67.08 lakh shares at a price band of Rs 205-216 per share. Investors could bid for 69 shares with a minimum investment of Rs 14,904, and in multiples thereafter. The allotments were announced on May 23.

Should you buy, sell or hold?

Analysts who are tracking the issue had expected a strong listing. "As anticipated, Borana Weaves made a strong market debut, listing at a 12.5% premium over its issue price. The stock quickly hit the upper circuit and surged to trade 18% higher on the first day, reflecting strong investor interest and confidence in the company’s fundamentals. While short-term investors may consider booking profits following the robust listing performance, long-term investors are advised to adopt a wait-and-watch approach. Close monitoring of the company’s execution capabilities and progress on expansion plans will be key before taking a long-term position," said Gaurav Garg from Lemonn Markets Desk.

"For investors looking at listing gains, it may make sense to book profits if the scrip opens well above the issue price. However, if it sees steady volumes and a stable trend post listing, partial profit-booking and holding the rest could also be a sensible strategy," said Mahesh M. Ojha, AVP - Research and Business Development at Hensex Securities.

On long-term prospects, Ojha said Borana Weaves has a competitive edge, owing to its integrated operations, focus on margin expansion, and niche presence in the synthetic fabric space. "Valuations appear fair at a P/E of around 24x at the top end. With consistent execution and expansion, it has the potential to become a long-term compounder," he said.

Ahmedabad-based Borana Weaves manufactures and markets unbleached synthetic grey fabric, primarily catering to the B2B segment. The company aims to strengthen its regional presence for better customer service and timely deliveries.

Commenting on the industry outlook, Narendra Solanki, Head – Fundamental Research, Investment Services at Anand Rathi Shares and Stock Brokers, said India’s synthetic textile sector stands to benefit from global trends. "With the man-made fibres market expected to grow at 3.7 per cent by 2025, Borana is well-placed to capitalise on both domestic and export opportunities."

Solanki added that the shift towards water jet looms could further support long-term profitability.

"Given the fundamentals and growth outlook, investors may consider booking partial gains on listing and retaining a portion for the long term," Solanki said.

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