Sonaselection India is set to enter the primary market with an initial public offer of ₹130.61 crore. The company has filed its Draft Red Herring Prospectus, or DRHP, with the market regulator. The IPO will consist only of a fresh issue. There is no offer for sale, or OFS, by existing shareholders.
The IPO is expected to open from September 17 to September 21, 2026. The company may list its shares on September 24. However, investors will need to wait for the final price band before they can judge the issue on valuation.
At first look, Sonaselection India presents a strong growth story. Its revenue rose from ₹120.98 crore in FY24 to ₹315.95 crore in FY25 and then to ₹516.95 crore in FY26. This means the company reported a revenue CAGR of about 106.7% over two years.
Profit also rose during the same period. Profit after tax, or PAT, stood at ₹13.09 crore in FY24. It rose to ₹18.56 crore in FY25 and reached ₹34.02 crore in FY26. This gives a PAT CAGR of about 61.2%.
These numbers make the IPO worth a closer look. At the same time, investors should not judge the company only by its fast revenue growth.
How the Company Plans to Use IPO Money
The company plans to use most of the IPO proceeds for two major needs. About ₹80 crore will go toward debt repayment or prepayment. Another ₹50.61 crore will be used for plant and machinery.
This use of funds is important for investors. A large part of the issue proceeds will not go directly toward new business expansion. Instead, the company plans to reduce its debt burden and improve its production capacity.
Debt repayment can help lower interest costs and improve the balance sheet. New machinery can also help the company increase its production and support future sales.
The key question is whether these steps will help Sonaselection create stronger cash flows and profits over the next few years.
Revenue Growth Has Been Very Fast
Sonaselection’s revenue growth is the biggest attraction in the IPO story. Revenue stood at ₹120.98 crore in FY24. It more than doubled to ₹315.95 crore in FY25. In FY26, revenue rose again to ₹516.95 crore.
This sharp rise helped the company report a revenue CAGR of about 106.7% from FY24 to FY26.
The company has also seen a major rise in its customer base. Its number of customers increased from 191 in FY24 to 909 in FY26.
One reason for this change is the company’s shift in business mix. It has moved from a model that had a larger share of job-work processing toward the manufacture of finished and value-added fabrics.
This change can help the company earn more from each product and gain a stronger position in the textile value chain. It also gives the business more control over its products instead of relying mainly on processing work for other parties.
However, investors should also ask whether such a high growth rate can continue. A company that grows from a small base can report very high percentage growth. As the business gets larger, it becomes harder to maintain the same pace.
Profit Has Also Improved
Sonaselection has not only grown its revenue. Its profit has also moved up at a healthy rate.
PAT was ₹13.09 crore in FY24. It increased to ₹18.56 crore in FY25 and then rose to ₹34.02 crore in FY26. The PAT CAGR stood at about 61.2%.
The rise in profit is positive because it shows that the company has been able to turn part of its higher sales into earnings.
Still, the difference between revenue CAGR and PAT CAGR deserves attention. Revenue grew at about 106.7%, while PAT grew at about 61.2%. This does not mean the business is weak, but it shows that profit has not grown at the same pace as sales.
Investors should therefore study the company’s margins and costs before they decide whether the growth is of high quality.
Cash Flow Is a Major Concern
One of the biggest concerns in the DRHP is cash flow.
Sonaselection reported negative operating cash flow in both FY25 and FY26. The operating cash flow was an outflow of about ₹14.2 crore in FY25 and about ₹11.0 crore in FY26.
This matters because profit and cash are not the same thing.
A company can report a profit on its income statement while still face pressure on its cash position. This can happen when a large amount of money is tied up in inventory, receivables or other working capital.
For a textile business, working capital can be important because the company may need to hold raw materials and finished goods while also give customers time to pay.
The negative operating cash flow means investors should not look at the ₹34.02 crore FY26 PAT alone. They should also ask how much of that profit turns into actual cash.
Debt Remains Another Risk
Debt is another area that deserves close attention.
The company’s FY26 debt-to-equity ratio was around 2.48x. This is a high level of leverage and makes the planned ₹80 crore debt repayment especially important.
If the company can reduce debt after the IPO, its financial position could become more comfortable. Lower debt may also reduce interest costs and leave more room for future investment.
However, investors should check the company’s debt level after the IPO and see how much debt remains. They should also look at the interest cost and whether future cash flows are strong enough to support the business.
The IPO can help improve the balance sheet, but debt will remain an important factor until the company’s cash generation becomes stronger.
Dependence on One Manufacturing Facility
Another risk comes from the company’s dependence on its Bhilwara manufacturing facility.
A large share of its manufacturing activity is concentrated at this location. Such concentration can create a risk if the facility faces operational problems, supply issues, natural events or other disruptions.
The company may be able to manage this risk through better capacity planning and future expansion. Still, investors should keep this factor in mind when they assess the business.
Valuation Will Decide the IPO’s Appeal
The biggest missing piece at present is the IPO price band.
The company has reported strong growth, but fast growth does not automatically mean that a stock is cheap. The final valuation will decide whether investors are paying a reasonable price for that growth.
Once the price band is available, investors can calculate the company’s expected market capitalisation and compare it with its FY26 profit.
The P/E ratio will be particularly useful. EV/EBITDA can also help because it takes the company’s debt into account. This is important for Sonaselection because its debt level is relatively high.
A high valuation could make the IPO risky even if the company continues to grow. A more reasonable valuation could make the same business much more attractive.
A Growth Story With Some Clear Warning Signs
Sonaselection India has several positives. Revenue increased from ₹120.98 crore in FY24 to ₹516.95 crore in FY26. Its revenue CAGR was about 106.7%. PAT increased from ₹13.09 crore to ₹34.02 crore, with a PAT CAGR of about 61.2%. The customer base also increased from 191 to 909.
The move toward finished and value-added fabrics could support future growth. The planned use of ₹80 crore for debt repayment may also improve the balance sheet, while ₹50.61 crore for plant and machinery could support higher capacity.
At the same time, negative operating cash flow, high leverage and dependence on one major facility are important risks. The business also has significant working-capital needs.
For this reason, Sonaselection India looks more like a high-growth IPO with meaningful risks than a simple low-risk investment story.
What Investors Should Watch
The final IPO price will be critical. Investors should also look at the company’s debt after the issue, cash flow from operations, profit margins and working-capital position.
The 106.7% revenue CAGR is impressive, but investors should ask whether the company can maintain healthy growth while also create real cash from that growth.
The IPO could become more attractive if the price is reasonable and the company shows better cash conversion. If the valuation is very high, however, the risks may outweigh the strong historical growth.
In short, Sonaselection India has built an impressive financial growth record over FY24 to FY26. Its next challenge is to prove that this growth can become sustainable revenue, stronger profits and healthy cash flow. That will be more important than the headline CAGR when investors decide whether the IPO deserves their money.
