Spunweb Nonwoven, along with its wholly owned subsidiary Spunweb India (SIPL), is issuing a 100% fresh equity offer of 63.52 lakh shares in the price band of INR 90–96, aggregating up to INR 60.98 crore. This Rajkot-based company has positioned itself as a significant player in India’s polypropylene (PP) spunbond nonwoven fabric segment—an industry increasingly driven by demand in hygiene, medical, packaging, and agri-tech applications. Spunweb IPO review shed light on the company’s business, growth potential, and future outlook.
Industry Overview
India’s technical textiles market is poised for robust growth, projected to reach USD 40–50 billion by 2025 from approximately USD 22 billion in 2021, growing at a CAGR of 10–12%. Within this, nonwoven fabrics are one of the fastest-growing sub-segments, primarily driven by applications in disposable hygiene products, medical textiles, filtration, and agro-textiles.
Government support has been instrumental: the PLI scheme for technical textiles (approved outlay INR 10,683 crore) aims to catalyse large-scale investment and exports. The Basic Customs Duty on several imported textile items has been raised to protect domestic manufacturers. Additionally, growing awareness about hygiene and sanitation under national schemes like Swachh Bharat and Ayushman Bharat has directly impacted demand for hygiene-related products using spunbond nonwovens.
India has seen a steep rise in per capita hygiene product consumption—from 5–6 units/year in the early 2010s to ~20+ units/year currently, still far behind global peers like China (50+) and the US (300+), offering a long runway for growth.
This macro backdrop bodes well for Spunweb, which offers scalable, high-GSM, wide-width fabric variants applicable across baby care, healthcare, agriculture, and construction. Rising disposable income, urbanisation, and the post-COVID emphasis on disposables further deepen the market opportunity for players like Spunweb.
Spunweb IPO Review: Business Model & Operations
Spunweb Nonwoven operates a fully-integrated B2B manufacturing model focused on spunbond nonwoven polypropylene fabrics. As of FY25, it operates five production lines across two units located in Rajkot, Gujarat. These facilities have a combined installed capacity of 32,640 metric tonnes per annum (MTPA). The lines are configured to support variable GSM ranges (7–150) and widths (1.6m to 3.2m), allowing customisation across a diverse product range.
Product Categories
- Hydrophobic fabrics (used in medical gowns and agriculture)
- Hydrophilic fabrics (for sanitary napkins and baby diapers)
- UV-stabilised and flame-retardant fabrics (for construction, automotive, and packaging)
- Super soft variants (for hygiene)
- Antistatic and breathable fabrics (industrial applications)
Operational Metrics
- Capacity Utilisation (FY25): 73.24% Domestic, 67.21% International
- Power self-sufficiency through rooftop solar: 1.1 MW at Spunweb, 0.43 MW at SIPL, contributing 11.77% and 6.45% of respective energy needs
- Workforce: 199 (Spunweb) + 51 (SIPL), with over 30 contract workers
Customer Base & Demand Verticals: The company caters to over 485 domestic customers and 20 international customers across:
- Hygiene: Diapers, sanitary pads (e.g., Millennium Babycares)
- Medical: Gowns, drapes, masks (e.g., RGI Meditech)
- Packaging & Agriculture: Crop covers, geo-textiles
- Construction: Roofing underlayment, waterproofing
Sales Strategy:
- Online and offline B2B lead generation
- Participation in trade shows
- In-market samples and trials for client machines
- Export-led visits and reference-based expansion
Backwards Integration through SIPL: SIPL was acquired in Dec 2024 for INR 20.36 crore. Its integration added capacity and allowed raw material synergy. Post-acquisition, Spunweb consolidated sourcing and operations to drive procurement efficiencies. SIPL also serves as a base for export orders, particularly from Egypt, Nigeria, and other developing markets.
Logistics: The company uses third-party logistics for raw material procurement and finished goods distribution via rail, road, and sea, without long-term tie-ups, allowing cost flexibility.
Distribution Model: Spunweb operates without dealers/distributors. All sales are direct B2B, offering better control over pricing and customer feedback loops. High-touch client engagement ensures repeat business and product stickiness.
Scalability: The high asset turnover, modular production lines, and widening customer base suggest an efficient model that can scale with incremental investment in machinery and working capital. Planned modernisation and IPO proceeds allocated for working capital (INR 24.5 crore) will allow better capacity absorption.
Capacity Utilisation:
- FY25 capacity utilisation: 73.24% (Domestic), 67.21% (Exports)
- SIPL’s lines are newer and more energy-efficient, aided by rooftop solar capacities (1.1 MW at Spunweb, 0.43 MW at SIPL), contributing 11.77% and 6.45% of energy needs, respectively.
In summary, Spunweb’s business model is volume-driven but margin-accretive, enabled by its ability to serve multiple end-user industries through product versatility. SIPL integration offers immediate scale and cost advantages, while growing hygiene and medical demand support structural tailwinds. The company’s operational metrics, capacity utilisation trends, and supply chain flexibility reflect a well-calibrated model suited for expansion in India’s emerging nonwoven landscape.
Objects of the Issue
The IPO is a pure fresh issue; key allocations include:
- INR 24.5 crore for working capital—highlighting liquidity needs amidst growing order volumes.
- INR 13 crore for machinery modernisation and line upgrades—potential margin enhancer.
- INR 6 crore towards partial debt repayment—modest deleveraging.
- INR 3 crore for general corporate purposes, and the rest for IPO expenses.
Spunweb IPO Review: Financial Performance
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 115.92 | 148.61 | 226.35 |
| EBITDA | 10.64 | 14.46 | 31.12 |
| EBITDA Margin | 9.18% | 9.73% | 13.75% |
| PAT | 1.13 | 5.44 | 10.79 |
| PAT Margin | 0.97% | 3.66% | 4.77% |
| ROE | 5.79% | 24.06% | 31.63% |
| ROCE | 7.30% | 11.55% | 33.66% |
| Debt/Equity | 2.46 | 1.93 | 2.11 |
The company has almost doubled its revenue over two years while maintaining healthy margin accretion. FY25’s EBITDA margin uptick reflects SIPL integration efficiencies. However, a debt/equity above 2x signals high leverage despite profitability.
Despite reporting a PAT of INR 10.79 crore in FY25, the company witnessed negative cash flow from operations of INR -7.7 crore due to increased receivables and inventory buildup. This working capital stretch warrants monitoring, especially in a debt-heavy structure.
Spunweb IPO Review: Risks
- In FY25, capacity utilisation was 73.24% (Company) and 67.21% (SIPL). Low utilisation and working capital constraints may adversely impact growth and profitability.
- Despite INR 50.35 crore sanctioned working capital, fluctuations in raw material costs, receivables, and credit terms could lead to a working capital deficit and liquidity crunch.
- In FY25, 87.06% (Company) and 92.44% (SIPL) revenue came from domestic sales, increasing exposure to geographic, economic, and regulatory risks in the Indian market.
- FY25 cash flow from investing was -INR 8.63 crore, and FY24 financing flow was -INR 5.47 crore, indicating continued negative cash flow and financial strain.
- Inventory formed 41.64% of current assets in FY25. Delays in raw materials and receivables mismanagement could impact liquidity, increase finance costs, and hurt profitability.
- With a total indebtedness of INR 93.01 crore, the business depends on bank credit. Any failure in credit renewal or enhancement may severely impact operations and financial health.
- Unsecured loans worth INR 15.70 crore are repayable on demand. Any sudden repayment request could put significant pressure on the company’s cash flows.
- Litigation claims worth INR 1.27 crore are pending. Any adverse judgment could lead to financial liabilities and negatively affect the company’s reputation and operations.
Spunweb IPO Analysis: Valuation & Peer Comparison
At the upper band of INR 96, implied PE is 15.29x FY25 earnings. This compares well to:
- Fiberweb India: ~18x, ROE ~11%, lower growth
- RSWM Ltd (larger textile peer): ~15x, more diversified but lower margin
Given Spunweb’s higher ROE (31.6%), superior margin trajectory, and scale potential, the valuation appears justified.
Verdict
Spunweb presents a compelling play on India’s underpenetrated nonwoven segment. Its dual plant setup, diversified application portfolio, recent backwards integration, and steadily improving margins indicate operational maturity. While cash flow volatility and customer concentration remain caveats, the growth momentum, use-of-funds clarity, and promoter skin in the game justify a confident long-term bet.
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