Siddhi Cotspin IPO Listing: Stock Lists at 24% Discount on NSE

Siddhi Cotspin IPO Listing: Shares Open at Lower Circuit, Plunge 24% on Debut Day

Siddhi Cotspin, a prominent cotton yarn manufacturer, recently made its debut on the NSE SME platform.

However, the listing turned out to be a disappointing affair for investors as the stock opened at a significant discount to its IPO price and closed the first day in a lower circuit, wiping out nearly a quarter of its market value.

Siddhi Cotspin IPO: Key Details and Subscription Overview

The initial public offering (IPO) of Siddhi Cotspin was launched between September 19 and 23, raising a total amount of ₹69.85 crore. The IPO saw a robust subscription response from investors across categories, indicating strong market interest. The issue was oversubscribed by over four times in total, highlighting the demand for the shares.

Breaking down the subscription numbers:

• Qualified Institutional Buyers (QIBs) category was oversubscribed an impressive 17.53 times (excluding anchor investors).
• Non-Institutional Investors (NIIs) subscribed 5.94 times.
• Retail investors showed a decent appetite with 1.5 times subscription.

Despite this enthusiastic response during the subscription phase, the actual listing was not as encouraging for shareholders.

Listing Day Performance: No Listing Gains, Shares Close at Lower Circuit

Siddhi Cotspin’s IPO shares were issued at ₹108 per share. On listing day, however, the shares debuted at ₹86.40 on the NSE SME platform—a sharp 20% discount from the IPO price. Rather than rewarding investors with listing gains, the market instead dealt a blow to early shareholders.

The downside momentum continued throughout the day. Siddhi Cotspin’s stock hit its lower circuit limit of ₹82.10 and closed at this level, translating into a decline of nearly 24% (23.98% precisely) from the IPO price. This marked one of the steepest falls for a company listing on the NSE SME platform in recent times.

Such a steep fall can be attributed to multiple factors, including market sentiment, valuation concerns, and broader sectoral trends impacting textile and cotton yarn manufacturers. The listing debacle underlines the volatile nature of SME IPO investments and serves as a cautionary tale for retail investors chasing quick listing gains.

How Siddhi Cotspin Plans to Utilize IPO Proceeds

Siddhi Cotspin’s IPO comprised two components—fresh issuance of new shares worth ₹53.4 crore and an Offer for Sale (OFS) of 15.24 lakh shares by existing shareholders. The total capital raised via the fresh issue is earmarked for several strategic purposes:

• Debt Reduction: ₹8.97 crore will be directed towards reducing the company’s debt burden, which is a positive move to strengthen its balance sheet.
• Working Capital Needs: ₹25.10 crore will be utilized to support day-to-day operations and finance ongoing business activities.
• General Corporate Purposes: The remaining funds will go toward unspecified corporate needs, which may include expansion, modernization, or other growth initiatives.

Proceeds from the OFS will not go to the company but to the selling shareholders, who have partly exited through this route.

About Siddhi Cotspin: Company Overview and Operations

Established in 2015, Siddhi Cotspin operates in the cotton yarn manufacturing industry, producing and selling a diverse range of cotton yarns. The company’s primary customers include textile manufacturers, garment exporters, and distributors, positioning it as an important player in the textile supply chain.

Its manufacturing facility is located in Dholi, Ahmedabad, Gujarat, and boasts a total spindle capacity of 29,736. This capacity enables Siddhi Cotspin to produce over 90 lakh kilograms of cotton yarn and more than 2.7 crore kilograms of value-added yarn annually, reflecting a significant production scale for an SME company.

Financial Performance: Strong Growth Amid Debt Reduction

Siddhi Cotspin has demonstrated notable financial progress in recent years. The company’s net profits have more than doubled over two fiscal years, with ₹6.02 crore reported in FY2023, which rose to ₹12.18 crore in FY2024 and further to ₹13.08 crore in FY2025. This consistent growth in profitability reflects improved operational efficiency and effective cost management.

Simultaneously, Siddhi Cotspin’s total income has experienced remarkable expansion, growing at a compound annual growth rate (CAGR) exceeding 90%, reaching ₹724.66 crore in FY2025. This robust revenue growth showcases the company’s ability to scale its operations rapidly in a competitive market.

Equally important is the company’s commitment to deleveraging. Its debt levels have steadily declined over the past three years:

• ₹113.78 crore at the end of FY2023
• ₹90.58 crore at the end of FY2024
• ₹67.11 crore at the end of FY2025

This reduction in debt significantly improves Siddhi Cotspin’s financial health and reduces risk, which could help the company secure better financing terms in the future.

Moreover, the company’s reserves and surplus—a measure of retained earnings and shareholder equity—have increased from ₹49.75 crore in FY2023 to ₹59.98 crore in FY2025, indicating strong capital accumulation and sustainability.

Market and Sector Context: Challenges and Opportunities

The cotton yarn industry is highly cyclical and sensitive to fluctuations in raw material prices, particularly cotton, which is affected by climatic conditions and global demand-supply dynamics. Additionally, competition from synthetic fibers and international players adds to the sector’s challenges.

In this context, Siddhi Cotspin’s ability to grow revenues and profits while reducing debt is commendable. However, the weak listing performance reflects investor concerns over valuation, market conditions, or future growth prospects amid economic uncertainties.

For investors, the Siddhi Cotspin IPO serves as a reminder of the risks involved in investing in SME companies, which typically have higher volatility and lower liquidity compared to larger listed firms.

Final Thoughts: Siddhi Cotspin IPO—A Mixed Outcome

While Siddhi Cotspin’s IPO subscription was robust, reflecting strong investor interest, the disappointing listing day performance has overshadowed initial enthusiasm. The nearly 24% drop in share price at close represents a significant loss for IPO investors looking for quick listing gains.

However, the company’s strong underlying financial performance, steady debt reduction, and clear utilization plan for the IPO proceeds provide a basis for potential long-term value creation.

Whether Siddhi Cotspin can recover its listing losses and deliver sustained shareholder returns will depend on its execution capabilities and broader market conditions.

Investors considering Siddhi Cotspin going forward should weigh these factors carefully, keeping in mind the inherent risks associated with SME stock investments.