Cedaar Textile Ltd IPO Analysis: Weaving Through the Details

The Indian stock market always brings new opportunities, and for those watching the manufacturing sector, especially textiles, the upcoming Cedaar Textile Ltd IPO is certainly on the radar. This article will give you a clear, easy-to-understand look at Cedaar Textile Ltd, covering its business, key financial numbers, what its IPO looks like, and how its initial subscription is going. We will also talk about its Grey Market Premium and, very importantly for many, its Shariah compliance status.

Making smart investment choices means really understanding a company’s business, its financial health, and the ethical side of things. Let us get into what Cedaar Textile Ltd is offering and whether it might fit into your investment plans.

Understanding the Shariah Status of Cedaar Textile Ltd IPO

For many investors, especially those from the Muslim community, checking if an investment is Shariah-compliant is a core part of their decision-making. This means looking closely at the company’s business activities and its financial numbers to see if they follow Islamic law.

After a thorough screening, Cedaar Textile Ltd is unfortunately classified as “NON-SHARIAH COMPLIANT.”

Here is a breakdown of why it does not pass the screening:

• The Business: This aspect passes, meaning the core business activities of textile manufacturing are generally permissible in Islam.
• Impermissible Income to Total Revenue: This also passes, as it is below the acceptable threshold.
• Interest-bearing Debt to Total Assets: This is where the company fails. The screening shows that the interest-bearing debt to total assets exceeds the commonly accepted Shariah threshold (33%).
  • Further screening notes explain that the company’s total debt, which includes long-term borrowings and short-term borrowings, exceeds 33% of its total assets. This high level of interest-based debt is the primary reason for its non-compliance.
• Illiquid Assets to Total Assets Ratio: This passes, indicating a healthy proportion of tangible assets.
• Net Liquid Assets vs Market Capitalisation: This also passes.
• Non-Compliant Investments to Total Assets: This passes.

Despite passing most of the business and financial ratio checks, the high proportion of interest-bearing debt makes Cedaar Textile Ltd’s IPO non-Shariah compliant. This is a very important point for Muslim investors to consider.

If you are interested in learning more about Cedaar Textile Ltd’s business and financials, please proceed further to read more details below.

About Cedaar Textile Ltd: A Look into the Fabric of Their Business

Cedaar Textile Ltd, identified by its IPO symbol CEDAAR, operates in the textile industry. This sector is a fundamental part of India’s manufacturing landscape, known for its deep roots and wide range of products, from fabrics to finished garments. Companies in this area typically focus on different aspects of textile production, such as spinning, weaving, processing, or garment manufacturing.

A company’s journey in this industry often involves adapting to changing fashion trends, managing raw material costs, and investing in modern machinery to stay competitive. Cedaar Textile Ltd’s participation in an IPO suggests they are looking to grow and expand their operations within this dynamic sector.

Cedaar Textile IPO Snapshot: All the Important Details

The Cedaar Textile Ltd IPO is an NSE SME Bookbuilding issue. Here is a simple overview of its key information, based on the tentative schedule provided:

• IPO Open Date: Monday, June 30, 2025
• IPO Close Date: Wednesday, July 2, 2025
• Issue Price Band: The price for one equity share is set between ₹130 and ₹140.
• Face Value: Each share has a face value of ₹10.
• Sale Type: This IPO is entirely a Fresh Capital issue, meaning all the money raised will go directly to the company.
• Total Issue Size: The company aims to issue 43,50,000 shares, which will raise up to ₹60.90 Crore.
• Reserved for Market Maker: A portion of 2,18,000 shares, valued at about ₹3.05 Crore, is reserved for the market maker, NNM Securities Private Limited.
• Net Offered to Public: After accounting for the market maker portion, 41,32,000 shares are available to the public, aiming to raise up to ₹57.85 Crore.
• Listing At: The shares will be listed on the NSE SME platform.

Tentative Schedule for the IPO:

• IPO Open Date: Monday, June 30, 2025
• IPO Close Date: Wednesday, July 2, 2025
• Tentative Allotment Date: Thursday, July 3, 2025
• Initiation of Refunds: Friday, July 4, 2025
• Credit of Shares to Demat Account: Friday, July 4, 2025
• Tentative Listing Date: Monday, July 7, 2025
• Cut-off time for UPI mandate confirmation: 5 PM on July 2, 2025

Minimum Investment Lot Size:

• For Retail Investors (Minimum): 1 lot, which is 1,000 shares, requiring an investment of ₹1,40,000 at the upper price band.
• For HNI Investors (Minimum): 2 lots, which is 2,000 shares, requiring an investment of ₹2,80,000 at the upper price band.

The company’s shareholding before the IPO stands at 95,28,600 shares, and after the IPO, it will increase to 1,38,78,600 shares.

The funds raised from the IPO are typically earmarked for various strategic purposes to fuel growth, which for Cedaar Textile might include funding working capital requirements, expansion of manufacturing facilities, and general corporate purposes.

Financial Performance: A Glimpse into the Books

Looking at the company’s financial information, here are some key figures (Restated Consolidated, amounts in ₹ Crore):

Key Performance Indicators (KPIs) as of Sunday, March 31, 2024:

• Market Capitalization: ₹194.30 Crore
• Return on Equity (ROE): 56.06%
• Return on Capital Employed (ROCE): 26.90%
• Debt/Equity Ratio: 5.79 (This high ratio directly contributes to its Shariah non-compliance)
• Return on Net Worth (RoNW): 56.06%
• PAT Margin (Profit After Tax Margin): 5.83%
• EBITDA Margin: 15.19%
• Price to Book Value: 4.16

The company has seen fluctuations in its revenue over the past few years, with a notable dip in the period ending December 2024 compared to March 2024 and March 2022. However, the net profit after tax shows growth, especially from March 2023 to March 2024, before a slight dip in December 2024. The high Debt/Equity ratio and total borrowings indicate a significant reliance on debt for its operations.

Objects of the Issue: Cedaar Textile Ltd plans to use the net proceeds from the IPO for the following key purposes:

1. Installation of a Grid-tied Solar PV Rooftop System for Captive evacuation: ₹8.00 Crore
2. Modernization of the Machines: ₹17.00 Crore
3. To meet working capital requirements: ₹24.90 Crore
4. General Corporate Purpose
5. Issue Expenses

These objectives generally aim to enhance operational efficiency, reduce energy costs, and strengthen the company’s financial liquidity for future growth.

IPO Subscription Status: What the Numbers Say

The subscription status gives us an early look into how much demand there is for the shares from different types of investors: big institutions (Qualified Institutional Buyers or QIBs), high-net-worth individuals (Non-Institutional Investors or NIIs), and everyday retail investors.

As of June 30, 2025, at around 07:00 PM (Day 1), here’s how the Cedaar Textile IPO Subscription Status (Bidding Detail) stands:

• QIB (Qualified Institutional Buyers): 0.00 times subscribed (Out of 5,22,000 shares offered, 0 shares were bid for).
• NII (Non-Institutional Investors): 0.22 times subscribed (Out of 13,28,000 shares offered, 2,95,000 shares were bid for, with 5 applications).
• Retail Individual Investors (RII): 0.06 times subscribed (Out of 15,00,000 shares offered, 87,000 shares were bid for, with 87 applications).
• Total Subscription: 0.11 times (Out of 33,50,000 shares offered, 3,82,000 shares were bid for, with a total of 92 applications).

On its first day, the IPO is currently undersubscribed overall across all categories. Retail investors have shown some interest, but the overall demand is low. It will be important to keep an eye on these numbers over the next few days to see if demand picks up.

Grey Market Premium (GMP) Insights

The Grey Market Premium (GMP) is an unofficial, speculative price at which IPO shares sometimes trade even before they officially list on the stock exchange. It’s essentially an early, unofficial sign of what the market thinks the shares might be worth, showing how much extra (or less) investors might be willing to pay compared to the IPO’s issue price in this informal market.

For the Cedaar Textile Ltd IPO, the current GMP is:

• Cedaar Textile IPO GMP Today (as per image): ₹17
• Expected % Gain/Loss: 12.14% (This percentage is often calculated based on the upper end of the price band).

Important Note: Remember, GMP is not official or regulated. It is highly speculative and can change very quickly based on news, market mood, and other factors. Treat it as a very rough guide, not a guarantee of how the shares will perform when they officially list. Always make your investment decisions based on solid research into the company’s actual fundamentals, its financial health, and the broader market conditions.

Strengths: What Makes Cedaar Textile Stand Out?

While the Shariah status is a critical point for some investors, Cedaar Textile Ltd does have other aspects to consider.

• Established Industry: Operating in the textile sector, a foundational industry in India with continuous demand.
• Objectives for Growth: The IPO funds are clearly aimed at modernization and solar power integration, which could lead to improved efficiency and reduced operating costs.
• Positive KPIs: Metrics like high ROE and ROCE indicate that the company has been generating good returns on its equity and capital employed.

Risks & Challenges: The Threads of Concern?

Every investment comes with risks, and Cedaar Textile is no exception.

• Shariah Non-Compliance: This is a major factor for Muslim investors, as the high debt-to-asset ratio makes the company non-compliant with Islamic finance principles.
• High Debt Levels: A Debt-to-Equity ratio of 5.79 is very high, indicating significant financial leverage, which can increase financial risk, especially in an environment of rising interest rates.
• Market Volatility: The textile industry can be influenced by fashion trends, raw material price fluctuations, and global economic conditions.
• SME Listing Risks: As an SME IPO, it might experience lower trading liquidity and higher price volatility after listing compared to companies on the main board.
• Fluctuating Revenues: The provided financial data shows revenue fluctuations, which suggests the business might be exposed to varying demand or market conditions.

Making an Informed Investment Decision

Deciding whether to invest in an IPO like Cedaar Textile Ltd’s requires very careful thought. Here are some key points potential investors should consider:

• Company Fundamentals: Look closely at Cedaar Textile’s business model, its historical financial performance, its plans for growth (like modernization efforts), and how it stands against other companies in the textile sector.
• Industry Outlook: Think about the future prospects of the Indian textile industry. Are there new government policies, export opportunities, or consumer shifts that could positively or negatively impact the company?
• IPO Valuations: Compare the IPO’s price band and its KPIs to similar listed textile companies to see if it offers a fair valuation, especially considering its high debt.
• Risk Factors: It is very important to read the company’s Red Herring Prospectus (RHP) thoroughly. This document will explain specific risks, such as market competition, supply chain challenges, regulatory changes, and crucially, the implications of its high debt levels.
• Shariah Compliance: For those strictly adhering to Shariah principles, the “NON-SHARIAH COMPLIANT” status due to its high interest-bearing debt is a critical factor and likely means this IPO would not be suitable.

Disclaimer

This article is for informational and educational purposes only and should not be taken as financial advice. Investing in IPOs always comes with risks, and there is no promise of returns. We strongly recommend that you do your own thorough research, talk to a SEBI-registered financial advisor, and carefully read the Red Herring Prospectus (RHP) before making any investment decisions.

Make an Informed Decision

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