Sonaselection India Limited, an integrated fabric manufacturing and processing company based in Bhilwara, Rajasthan, has filed its Draft Red Herring Prospectus (DRHP) for an initial public offering. The company plans to raise a minimum of ₹130.61 crore through a fresh issue to repay existing bank borrowings and fund capital expenditure for plant and machinery expansion.

About the Company

Incorporated in 2022, Sonaselection India operates a single manufacturing facility in Hamirgarh, Bhilwara, with an installed processing capacity of 82.44 million meters per annum. The company specialises in producing 100% cotton fabric, cotton lycra (stretch) fabric, cotton blends, polyester blends, and providing fabric processing services. It combines in-house manufacturing with job-work processing activities to optimise capacity utilisation.

The company’s customer base expanded significantly from 191 in FY2024 to 909 in FY2026. While it maintains strong relationships with long-term clients, its geographic footprint is diversifying; revenue contribution from Rajasthan declined from 95.31% in FY2024 to 37.31% in FY2026.

Financial Performance

Sonaselection India has demonstrated rapid financial growth over the last three fiscal years. Revenue from operations grew at a compound annual growth rate (CAGR) of 106.71%, reaching ₹516.95 crore in FY2026. Profit after tax (PAT) also grew robustly, recording a CAGR of 61.19% to reach ₹34.02 crore in FY2026.

Despite profitability, the company reported negative operating cash flows in FY2025 (₹-14.18 crore) and FY2026 (₹-10.99 crore), driven by growing working capital requirements. The debt-to-equity ratio improved from 3.72x in FY2024 to 2.48x in FY2026.

Why the Company Is Raising Funds

The proceeds from the fresh issue will be allocated as follows:

• Debt Repayment: ₹80.00 crore towards repayment or pre-payment of certain bank borrowings, including accrued interest.
• Capital Expenditure: ₹50.61 crore for the purchase of plant and machinery at the existing manufacturing facility.
• General Corporate Purposes: An amount subject to a cap of 25% of gross proceeds, intended for strategic initiatives, working capital, and marketing.

As of July 31, 2026, the company had outstanding bank borrowings of approximately ₹263.84 crore.

Business Strengths

• Strategic Location: Based in Bhilwara, known as the 'Textile City' of Rajasthan, providing proximity to raw material suppliers and a robust textile ecosystem.
• Integrated Model: Combines manufacturing with job-work processing, offering operational flexibility and dual revenue streams.
• Experienced Leadership: Promoters Subhash Chandra Nuwal and Harshil Nuwal bring over 30 years and 14 years of industry experience, respectively, supported by a professional management team.
• Modern Infrastructure: Equipped with advanced machinery including stenter, merceriser, and sanforiser, ensuring quality and efficiency.

Key Risks

• Negative Operating Cash Flows: The company recorded negative operating cash flows in FY2025 and FY2026, which may impact its ability to meet operating expenses and service debt without external financing.
• Single Facility Dependency: Operations are concentrated in one manufacturing facility in Bhilwara, posing risks in case of disruption or shutdown.
• High Leverage: With a debt-to-equity ratio of 2.48x and significant outstanding borrowings, the company faces interest payment obligations and potential refinancing risks.
• Geographic and Supplier Concentration: Although improving, a significant portion of procurement (96.01% in FY2026) remains concentrated in Rajasthan. Additionally, substantial procurement is sourced from related party Sona Style Limited.
• Regulatory Compliance: The company has faced delays in filing statutory forms with the Registrar of Companies, leading to adjudication applications.

Important IPO Dates

• IPO Opening Date: 17-Sep-2026
• IPO Closing Date: 21-Sep-2026
• Allotment Date: Not Available
• Listing Date: Not Available

Offer Details

• Fresh Issue Size: Minimum ₹130.61 crore (₹80.00 crore for debt repayment + ₹50.61 crore for capex)
• Offer for Sale: Nil
• Price Band: Not Available

Bottom Line

Sonaselection India presents a high-growth profile with revenue tripling over two years, supported by an experienced promoter group and a strategic location in Rajasthan's textile hub. However, investors should note the company's reliance on a single facility, negative operating cash flows, and high leverage levels, which the IPO aims to address through debt reduction and capacity expansion.