EXECUTIVE SUMMARY

Aastha Spintex Limited is entering the public markets as an integrated cotton textile manufacturer with operations spanning cotton ginning and spinning. The company manufactures carded, combed and compact combed cotton yarns along with cotton bales, serving textile manufacturers, exporters and fabric processors across India.

Over the past three financial years, the company has demonstrated a notable improvement in both scale and profitability. Revenue from operations increased from ₹239.27 crore in FY2023 to ₹351.16 crore in FY2025, while profit after tax expanded sharply from ₹1.06 crore to ₹22.92 crore during the same period. EBITDA margins improved from 4.85% to 13.20%, reflecting better operating leverage and enhanced manufacturing efficiency.

The proposed IPO seeks to raise approximately ₹170 crore through a fresh issue of equity shares. A significant portion of the proceeds will be utilised towards the acquisition of Falcon Yarns Private Limited, which is expected to substantially expand the company's spinning capacity and strengthen its position within the cotton yarn industry.

From an investment perspective, Aastha Spintex represents a play on India's expanding textile manufacturing ecosystem. The company's integrated operating model, strategic location in Gujarat, renewable energy infrastructure and acquisition-led growth strategy provide a compelling foundation for future expansion. Nevertheless, investors should remain aware of sector-specific risks, including cotton price volatility, cyclicality in textile demand and customer concentration.

COMPANY OVERVIEW

Building Scale Through Integration

Established in 2013, Aastha Spintex operates exclusively in the business-to-business segment and supplies cotton yarns and cotton bales to textile manufacturers, exporters, bulk purchasers and fabric processors. Its products are used across a broad range of textile applications including denim, terry towels, shirting, sheeting, sweaters, socks, home textiles and industrial fabrics.

The company's manufacturing facility is located at Halvad in Gujarat, one of India's most important cotton-growing regions. This strategic location provides proximity to raw material suppliers, logistics infrastructure and skilled labour while reducing transportation costs and procurement risks.

Today, the facility houses:

• 25,920 installed spindles

• 15 compact ring spinning machines

• 12,000 MT annual cotton bale production capacity

• 7,700 MT annual cotton yarn production capacity

• Semi-automated manufacturing systems operating continuously across three shifts throughout the year.

INVESTMENT THESIS

1. Vertically Integrated Business Model

One of Aastha Spintex's most significant strengths is its integrated manufacturing structure.

This integration provides greater control over quality, inventory management and production scheduling. Unlike standalone spinning units that depend entirely on external suppliers for cotton bales, Aastha Spintex can utilise its own ginning operations to support yarn production while also generating revenue from cotton bale sales.

The model also creates additional monetisation opportunities through the sale of cotton seeds and cotton waste by-products, improving resource utilisation and operational efficiency.

FINANCIAL PERFORMANCE REVIEW

Strong Revenue and Earnings Expansion

Source: Company filings and IPO disclosures.

The financial trajectory highlights a business that has successfully transitioned from a low-margin textile manufacturer into a more profitable integrated operator. Revenue has grown at a healthy pace while profitability has improved significantly faster than topline growth.

The improvement in EBITDA margins is particularly noteworthy because textile businesses often struggle to maintain profitability during volatile raw-material cycles.

ACQUISITION OF FALCON YARNS: THE TRANSFORMATIONAL TRIGGER

A major part of the investment story revolves around the proposed acquisition of Falcon Yarns Private Limited.

The company intends to deploy approximately ₹111.51 crore from the IPO proceeds towards the acquisition. Falcon Yarns operates a manufacturing facility in Gondal, Gujarat, with annual spinning capacity of 9,757 MT.

Following the acquisition:

Current Capacity: 7,700 MT

Falcon Capacity: 9,757 MT

Combined Capacity: 17,457 MT

This transaction has the potential to more than double the company's effective spinning scale and strengthen customer reach across additional markets.

The acquisition therefore represents the most important catalyst for future growth and should be monitored closely by investors.

STRATEGIC DIFFERENTIATOR: RENEWABLE ENERGY PLATFORM

Power constitutes one of the largest operating costs for spinning companies.

Recognising this, Aastha Spintex has invested significantly in renewable energy infrastructure, including:

• 1 MW rooftop solar plant

• 4 MW ground-mounted solar plant

• 2.7 MW wind power plant

These assets collectively generate approximately 37,692 units of electricity per day and help reduce dependence on conventional grid power.

In an industry where energy costs materially affect profitability, this renewable energy platform could become a meaningful competitive advantage over time.