Sonaselection IPO - Should you apply?

Key takeaways

• Sonaselection India is raising ₹141.57 crore through its IPO, which is entirely a fresh issue priced between ₹94 and ₹99 per share. No exit of shareholders is involved in this issue.
• The subscription window for this IPO will remain open from September 17 to September 21, 2026. The shares are expected to list on the exchanges on September 24, 2026.
• Sonaselection India is an integrated fabric manufacturer and processor, based in Rajasthan. It serves customers with cotton, cotton lycra, and polyester-based fabrics.
• In recent years, the company has recorded a sharp growth in both revenue and profitability. However, the business is concentrated in a single facility, and the balance sheet looks notably leveraged.

The textile manufacturing sector of India is set to get a new listed entrant, as Sonaselection India Limited prepares to launch its IPO. The integrated fabric manufacturing and processing company, based in Rajasthan, has an established presence in its domain.

Subscription for the Sonaselection India IPO opens on September 17, 2026. Investors can place their bids till the IPO closes on Monday, September 21, 2026. The issue is a book-built offering worth ₹141.57 crore, which consists entirely of a fresh issue of 1.43 crore equity shares. It doesn’t include any provision for an offer for sale (OFS). This means the entire capital raised through this IPO will be used to fund the own operations of the company.

The company has set a price band from ₹94 to ₹99 per share, and each share has a face value of ₹10. Each lot contains 150 shares, which translates to a minimum investment of approximately ₹14,850 for retail investors applying at the cut-off price. The shares are likely to be allotted on September 22, 2026. The listing is scheduled for September 24, 2026, as the shares start trading on both the NSE and the BSE.

Choice Capital Advisors Pvt. Ltd. is the sole book-running lead manager for the issue. Kfin Technologies Ltd will serve as the registrar for this IPO.

Sonaselection India IPO details

Incorporated in 2022, Sonaselection India operates as an integrated fabric manufacturing and processing company. It produces value-added textile products. The offerings of the company include 100% cotton fabric, cotton lycra or stretch fabric, cotton blends, and polyester blends. 

It is also engaged in the job-work processing of 100% cotton, polyester-viscose, cotton blends, and polyester fabrics supplied by customers. The company initiated operations as a job-work-based processing company and later transitioned to a manufacturing-based model. In 2022, it acquired an established textile processing unit, and subsequently it commissioned a dedicated cotton fabric processing plant in July 2024.

The manufacturing facility of the company is located in Bhilwara, Rajasthan. It is equipped with a wide range of modern textile processing machinery, several of which are integrated with digital monitoring tools for process control.

Sonaselection India runs its own in-house laboratory, which is equipped with modern instruments. The enriched infrastructure helps in testing quality and maintaining control throughout the fabric processing cycle.

Manufacturing Mix and Customer Base

The dual approach of the company allows it to combine in-house manufacturing with job-work processing for third-party customers. 

Over the last three years, in-house manufacturing of the company has grown significantly to represent a much larger share of business over time. This reflects the transition of the company toward a more manufacturing-based model.

The company’s customer relationship appears reasonably durable. 132 customers have maintained an ongoing relationship with the company for at least three reporting periods. 

However, the contribution of these long-standing customers to overall revenue has dropped proportionally, although the business has expanded. This trend reflects the broadening customer base of the company, as it has scaled its manufacturing capacity.

As of July 31, 2026, Sonaselection India employed 979 personnel across various departments.

Financials 

On the financial front, the company has recorded substantial growth. The revenue of the company increased by 64% between FY25 and FY26. PAT also increased by 83% from ₹18.56 crore to ₹34.02 crore.

From the fresh capital raised through the IPO, the company has earmarked ₹80 crore toward the repayment or prepayment of its existing borrowings. It plans to spend another ₹50.61 crore as capital expenditure for plant and machinery at its existing manufacturing facility in Bhilwara. The rest will be used for general corporate purposes.

Should you apply for this issue?

Sonaselection India is noted for its rapid growth and improving scale of operations. However, investors must consider several risks related to concentration and leverage before applying.

Pros of investing in Sonaselection India

• Rapid financial growth: In FY26, the company reported a 64% rise in revenue and 83% growth in PAT. These numbers show that the business is scaling quickly. Profit growth is notably outpacing its growth of revenue, which is a positive sign for improving operational efficiency.
• Transition to a manufacturing-based model: The company has shifted from a job-work-based business to one where more than 80% of revenue comes from in-house manufacturing. It is capturing more value per unit of fabric processed compared to what it did earlier.
• Modern manufacturing infrastructure: The facility has a full range of processing machinery. With digital integration and a dedicated quality assurance laboratory available, it maintains product quality and operational efficiency even as it scales.
• Healthy capacity utilisation: At 82.71%, the capacity utilisation of the company in FY26 looks efficient. There’s limited scope for idle capacity dragging on returns.
• Broadening customer base: Although long-standing customers now contribute to a smaller share of its revenue, the company has sustained growth. It shows that the company is acquiring new customers while expanding its manufacturing capacity.

Cons of investing in Sonaselection India

• Highly leveraged balance sheet: Sonaselection India has a debt-to-equity ratio of 2.48, which is notably high. Considering the rising absolute borrowings, the company is more exposed to movements in interest rates and refinancing risk.
• Operational risk from a single facility: The company operates from a single manufacturing facility in Bhilwara, and there’s no backup site. In case of any equipment failure, power interruption, labour unrest, natural disaster, or unplanned shutdown at this facility, its production and customer deliveries could be directly disrupted.
• Significant geographic concentration: The facility of the company in Rajasthan accounted for a substantial share of revenue from operations across recent fiscal years. If there’s any adverse political, regulatory, or regional development in the state, the business could be affected.
• Negative operating cash flows: In both FY25 and FY26, the company recorded negative cash flows. This is primarily due to rising trade receivables and inventory. If this pattern continues, the company may face challenges in meeting its working capital requirements and servicing debt.
• Concentration of suppliers: The top 10 suppliers of the company accounted for 58.87% of the total purchases of the company in FY26. The company has not entered into definitive supply contracts with these suppliers. This leaves it exposed to potential delays, quality issues, or fluctuations in price.

Conclusion

Sonaselection India has already demonstrated its strong operational momentum. The company has transitioned successfully from a job-work processing business into a manufacturing-based fabric producer. Its healthy capacity utilisation and rising profitability are some of the key strengths potential investors would consider. Its strong positioning is further supported by the modern equipment base and in-house quality assurance capabilities.

At the same time, investors should be careful about the high leverage of the company and its dependence on a single manufacturing capacity. The operations are geographically concentrated in Rajasthan, and the company has recorded negative cash flows in recent years. These are some of the risks that require careful evaluation.