IPO Alert: Nandan Terry is all set to go public

Global textile and apparel trade has grown at a CAGR of 4% since 2005 and has reached the level of trade at $823 billion, while the apparel industry is the most traded category with a share of 57% of total trade in T&A. Global T&A is expected to reach $1 trillion by 2025.

India is the 6^th largest exporter of textile and apparel in the world, and the textile industry contributed around 2% of the overall GDP. The domestic T&A industry is worth $106 billion and is expected to grow at a CAGR of 12% to reach $220 billion by 2025-26.

Nandan Terry, part of the Chiripal group, has filed preliminary documents with markets regulator SEBI to raise ₹255 crores through an initial public offering.

Nandan Terry is aiming for a fund-raising of ₹40 crores in a pre-IPO placement, before filing the DRHP, and if it is successful then the company may reduce its issue size.

Nandan Terry plans to use ₹35.6 crores from the net proceeds towards repayment and prepayment on certain loans availed by them. The remaining funds would be utilized for general corporate purposes.

Textile Manufacturing

Nandan Terry formed in 2015, procures cotton bales from domestic and international markets and manufactures cotton yarn, which is in turn used as a raw material in the manufacturing of terry towels & towelling products, and sells woven fabric cloth in the open market manufactured by them.

The Ahmedabad-based company is involved in education, real estate, packaging and chemicals and offers a wide spectrum of manufacturing, contract manufacturing, trading, distribution and service-related activities in sectors like education, packaging, infrastructure, petrochemical etc.

Nandan Terry has international standard quality sales in countries like the United States of America, Canada, Israel, Germany, Hong Kong, Sweden, United Kingdom, Australia etc.

Nandan Terry’s main competitors in the market include Style Textile, Lupo, Nishant Mills, and Banswara Syntex.

Key Figures

Nandan Terry’s revenues from operations for the financial year 2021, was ₹538.52 crore with a growth of 25.42% versus ₹429.39 crore in fiscal 2020, primarily due to an increase in the sale of cotton yarn, towels and towelling products. The company had a net profit of ₹23.38 crores compared to ₹1.2 crores in the previous year.

Meanwhile, the company’s main source of income is derived from cotton yarn and cotton fabric, hence cotton is the primary source of raw material for the manufacturing process in all the divisions.

The weather conditions in India are very unpredictable and this could cause a lot of damage to the cotton crop, and might also increase the prices of existing cotton available in the market.

Nandan Terry is also involved in a lot of international sales. Revenue generated from sales outside India represented around 34.54% in 2021.

Any fluctuations in the currency rate or any major change in the government policy for international trade may affect the ongoing cash flows of the company.