United Cotfab Limited IPO

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They specialize in the manufacturing of high-quality open end yarn, catering to a wide spectrum of the textile industry.

Manufacturing Excellence

They are dedicated to maintaining stringent quality standards, backed by advanced technology and state-of-the-art machinery. Their systematic manufacturing process encompasses several critical stages:
i. Raw Material Selection: Ensuring only the finest cotton is used.
ii. Blending (if required): Mixing different cotton types to achieve desired properties.
iii. Spinning: Transforming raw cotton into yarn.
iv. Winding: Preparing yarn for various applications.
v. Quality Control: Continuous monitoring to ensure product excellence.

Technological Advancements

Their facility is equipped with modern, automatic machinery that enhances both productivity and efficiency. The expertise of their technical team in modern spinning technology and processing techniques ensures that every batch of open end yarn meets the highest quality standards. This focus on technology and skilled labor is pivotal in driving their production and profitability.

Client Relationships and Market Position

They have built strong relationships with a diverse range of clients, including textile manufacturers, garment exporters, and distributors. Their emphasis on quality, reliability, and timely delivery has fostered long-term partnerships with their customers.

Product Range and Applications

Before March 2023, their company was primarily engaged in the trading of cotton yarn. In April 2023, they transitioned to manufacturing open end cotton yarn. Cotton yarn, made from cotton fibers, comes in various thicknesses known as yarn weights. These include lace, fingering, sport, worsted, and bulky, each suitable for different products. Cotton yarn is widely used in the textile industry for knitting, weaving, and crocheting due to its softness, breathability, and versatility. It is a popular choice for clothing, home textiles, and other fabric-based products.

Conclusion

With a firm foundation in quality, technology, and customer satisfaction, their company is well-positioned to meet the evolving needs of the textile industry. Their dedication to excellence and sustainable practices ensures that they remain a trusted partner for their clients, contributing to their success and the overall growth of the textile sector.

Objects of the United Cotfab Limited IPO:

The Issue Proceeds from the Fresh Issue will be utilized towards the following objects: i. To Meet Working Capital Requirements ii. General Corporate Purposes iii. To meet Public Issue Expenses
DRHP of United Cotfab Limited IPO
RHP of United Cotfab Limited IPO

United Cotfab Limited IPO Details:

Open Date: Jun 13 2024
Close Date: Jun 19 2024
Total Shares: 5,184,000
Face Value: ₹ 10 Per Equity Share
Issue Size: 36.29 Cr.
Lot Size: 2000 Shares
Issue Price: ₹ 70 Per Equity Share
Listing At: BSE SME
Listing Date: Jun 24 2024

Promoters And Management:

Mr. Gagan Nirmalkumar Mittal, 41, is the chairman, managing director, and promoter of the company. He has been a Designated Partner at United Cotfab since its formation as a Limited Liability Partnership on August 25, 2015. After the company's conversion to United Cotfab Private Limited on November 2, 2023, he became its Chairman and Managing Director, a role he will hold for five years starting November 6, 2023. Mr. Mittal, who passed the Gujarat Board Higher Secondary exam, has 18 years of extensive experience in the textile industry and played a pivotal role in establishing the production facilities, contributing significantly to the company's growth. Mr. Nirmalkumar Mangalchand Mittal aged 66 years is Non-Executive Director of the Company. He has over 40 years of textile industry experience. He currently oversees the group's planning, administration, and commercial development. He was originally appointed as a Partner of Erstwhile United Cotfab Limited Liability Partnership since August 25, 2015 and subsequently his designation was changed to Designated Partner w.e.f March 25, 2021. Then after he is acting as a NonExecutive Director on Conversion of United Cotfab Limited Liability Partnership to United Cotfab Private Limited w.e.f. November 02, 2023. Mr. Safalkumar Hasmukhbhai Patel, 30, is an Independent Director of the company. He was appointed as an Additional Independent Director on November 6, 2023, and was confirmed as a non-executive independent director for a five-year term starting the same day, not subject to retirement by rotation. He holds a Certificate of Practice in Law in India, having cleared the All India Bar Examination, and has over five years of experience in the legal industry.

Financials of United Cotfab Limited IPO:

Particulars ( In Lakhs )
2021
2022
2023
2024
Revenue from Operations 0 0 44 11,529
Other Income 0 2 20 23
Total Revenue 0 2 64 11,553
Cost Raw Material Consumed 0 0 41 9,612
Change in Inventories 0 0 0 -775
Employees Benefit Expenses 0 0 0 219
Other Expenses 0.1 0.3 2 706
EBITDA -0.1 2 21 1,791
OPM (%) 0.00% 85.11% 32.79% 15.50%
Depreciation & Amortisation 0 0 0 252
EBIT -0.1 2 21 1,539
Finance Cost 0 0 0 336
PBT -0.1 2 21 1202
Tax 0 0 7 336
PAT -0.1 2 14 867
NPM (%) 0.00% 85.11% 21.76% 7.50%
No.of Shares 171.9 171.9 171.9 171.9
EPS -6.39 0.01 0.08 5.04

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
United Cotfab Limited 115 9 5.04 13.9 70 120
Lagnam Spintex Limited 438 15 8.25 16.2 134 237
PBM Polytex Limited 192 -6 -9.38 N/A 83 57
Vippy Spinpro Limited 250 4 7.41 23.0 170 100
* All the data is as per FY24.

Recommendation on United Cotfab Limited IPO:

Review and Recommendation of United Cotfab by team IZ is 3/10. 1. United Cotfab Limited specializes in manufacturing high-quality open-end yarn for the textile industry. The production process is meticulous, involving raw material selection, blending, spinning, winding, and stringent quality control. 2. Technological Advancements Advanced technology and machinery form the backbone of United Cotfab’s operations, enabling efficient production processes and high-quality output. The technical team is adept in modern spinning technology and processing techniques, ensuring that each batch of yarn adheres to the highest quality standards. 3. Market Position and Client Relationships United Cotfab has established strong relationships with a diverse client base, including textile manufacturers, garment exporters, and distributors. Emphasizing quality, reliability, and timely delivery has enabled the company to foster long-term partnerships and a loyal customer base. The company also engages in the trading of cotton yarn, which complements its manufacturing activities. 4. Product Overview: Cotton Yarn Cotton yarn, produced from cotton fibers, comes in various weights, including lace, fingering, sport, worsted, and bulky, each suited for different applications such as knitting, weaving, and crocheting. Known for its softness, breathability, and versatility, cotton yarn is widely used in clothing, home textiles, and other fabric-based products. 5. SWOT Analysis Strengths: i. Raw Material Availability            ii. Labor Force                    iii. Industry Support Weaknesses: i. Price Fluctuations                      ii. Competitive Sourcing Opportunities: i. Rising Demand                           ii. Export Potential Threats: i. Government Policies                 ii. Competition                     iii. Product Differentiation 6. Competitive Landscape United Cotfab operates in a highly competitive market, both domestically and internationally. Competition hinges on price, quality, product variety, customer service, and innovation. 7. The Revenue has Increased from Rs.44 Lakhs in FY23 to Rs.115 Crores in FY24. 8. The EBITDA has Increased from 21 Lakhs in FY23 to 17 Crores in FY24. 9. The PAT has Increased from 14 Lakhs in FY23 to 8 Crores in FY24. 10. As per FY24, CFO/EBITDA is 0.98 and EPS is 5.04, 11. Market Capitalization is 120 Crores & P/E is 13.9x based on FY24.

Lead Manager of United Cotfab Limited IPO:

  1. Beeline Broking Limited

Registrar of United Cotfab Limited IPO:

  1. Purva Sharegistry India Private Limited

Company Address:

United Cotfab Limited Survey No. 191, Village-Timba, Taluka-Dascroi, Timba Ahmedabad, Dascroi -382425 Phone: +91 987987 4955 Email: info@unitedcotfab.com Website: https://www.unitedcotfab.com/

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