Varmora Granito IPO DRHP: ₹245 crore fresh issue; top-four tile maker
- Varmora Granito files DRHP for ₹245 crore fresh issue to repay borrowings
- Top-four Indian tile maker reports FY2026 revenue of ₹1,512.46 crore
- PAT rose to ₹55.09 crore in FY2026 from ₹30.77 crore in FY2025
- IPO opens on September 22, 2026, with listing on September 29, 2026
*this image is generated using AI for illustrative purposes only.
Varmora Granito Limited, a leading Indian tile manufacturer headquartered in Morbi, Gujarat, has filed its Draft Red Herring Prospectus (DRHP) for an initial public offering. The company plans to raise ₹245.00 crore through a fresh issue to repay outstanding borrowings and fund general corporate purposes.
About the Company
Incorporated in 2003, Varmora Granito has over 23 years of operating history. It manufactures and distributes a portfolio of more than 3,500 SKUs, including Glazed Vitrified Tiles (GVT), Polished Vitrified Tiles (PVT), ceramic tiles, bathware, and adhesives. The company operates eight manufacturing facilities in the Morbi cluster, which contributed 81.72% of FY2026 revenue from operations. It is among the top four players in the Indian tiles market by revenue in FY2026 and was the first company in Asia to commercialize SACMI's Integrated Stone Technology (IST) in 2024.
The company maintains a pan-India distribution network with 305 Exclusive Brand Outlets (EBOs) and 2,758 Multi-Brand Outlets (MBOs) across 988 cities in 24 states. It also exports to over 100 countries. Katsura Investments, a Carlyle affiliate, invested ₹6,403.52 million in the company in FY2023.
Financial Performance
Varmora Granito reported revenue from operations of ₹1,512.46 crore in FY2026, growing at a CAGR of ~2.65% from FY2024. Profit after tax (PAT) improved significantly to ₹55.09 crore in FY2026 from ₹30.77 crore in FY2025. Gross margins expanded from 35.26% in FY2024 to 37.92% in FY2026, driven by a shift toward premium GVT and technical products, which accounted for 73.98% of total revenue from operations.
| Metric | FY2024 (₹ Cr) | FY2025 (₹ Cr) | FY2026 (₹ Cr) |
|---|---|---|---|
| Revenue from Operations | 1,435.48 | 1,446.03 | 1,512.46 |
| Total Expenses | 1,412.92 | 1,456.28 | 1,486.36 |
| Profit Before Tax (PBT) | 63.04 | 37.65 | 76.62 |
| Profit After Tax (PAT) | 44.94 | 30.77 | 55.09 |
| Total Equity | 703.36 | 743.20 | 810.22 |
| Total Liabilities | 772.80 | 846.61 | 699.66 |
As of March 31, 2026, total borrowings stood at ₹3,579.48 million (₹357.95 crore). The debt-to-equity ratio was 0.44x, and the interest coverage ratio was 1.89x. Operating cash flow surged to ₹234.07 crore in FY2026.
Why the Company Is Raising Funds
The company intends to use the proceeds from the fresh issue as follows:
- Repayment of Borrowings – Company: ₹215.00 crore for repaying/pre-paying outstanding borrowings and accrued interest.
- Repayment of Borrowings – Subsidiaries: ₹30.00 crore for investment in wholly-owned subsidiaries (Covertek Ceramica Private Limited and Varmora Sanitarywares Private Limited) to repay their borrowings.
- General Corporate Purposes: Amount not specified, subject to a cap of 25% of gross proceeds, for growth opportunities, brand building, and working capital.
Business Strengths
- Market Position: Among the top four tile manufacturers in India by revenue in FY2026.
- Product Portfolio: Over 3,500 SKUs with GVT and technical products contributing 84.19% of tile revenue.
- Technology Leadership: First in Asia to commercialize SACMI's Integrated Stone Technology (IST).
- Distribution Network: Strong presence with 305 EBOs and 2,758 MBOs; EBO contribution to domestic tile sales rose to 27.72% in FY2026.
- Manufacturing Scale: Eight facilities in Morbi with 81.72% of revenue from in-house manufacturing.
Key Risks
- Geographic Concentration: All eight manufacturing facilities are located in Morbi, Gujarat. Cyclone Biparjoy caused a three-week shutdown in FY2024.
- Revenue Concentration: GVT and technical products account for 73.98% of total revenue from operations.
- Energy Costs: Power and fuel expenses constituted 21.06% of total income in FY2026, exposed to geopolitical disruptions.
- Indebtedness: Total borrowings of ₹357.95 crore with an interest coverage ratio of 1.89x.
- Franchisee Dependency: 66.80% of domestic sales come from franchisee-operated outlets, limiting direct control.
- Regulatory Risks: Disclosed dealings with entities in sanctioned jurisdictions and contingent liabilities of approximately ₹114.75 million.
Important IPO Dates
- IPO Open Date: 22-Sep-2026
- IPO Close Date: 24-Sep-2026
- Allotment Date: 25-Sep-2026
- Listing Date: 29-Sep-2026
Offer Details
- Fresh Issue: ₹245.00 crore (identified proceeds)
- Offer for Sale: Not available
- Price Band: Not disclosed
Bottom Line
Varmora Granito is leveraging its position as a top-four tile manufacturer and recent profitability recovery to raise ₹245.00 crore for debt reduction. While the company benefits from technology leadership and a strong distribution network, investors note risks related to geographic concentration, energy cost volatility, and existing indebtedness.
How might Varmora Granito's heavy reliance on the Morbi manufacturing cluster impact its operational resilience and insurance costs in the face of increasing climate-related disruptions?
Given the significant portion of proceeds allocated to debt repayment, will this deleveraging strategy sufficiently improve the interest coverage ratio to attract long-term institutional investors post-IPO?
How does the company plan to mitigate the risk of franchisee dependency, where nearly 67% of domestic sales are controlled by outlets outside direct management?
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