Can Varmora Granito IPO deliver long-term growth for high-risk investors?

By

, ET BureauLast Updated: Sep 22, 2026, 06:21:00 AM IST

Synopsis

Varmora Granito is gearing up for a ₹320 crore IPO aimed at funding capital projects and addressing outstanding debts. Following the offering, the promoter's stake will shrink to 47 percent. However, potential risks related to geopolitical tensions and export market concentration are evident. While revenue saw modest growth, the EBITDA margin improved significantly, prompting investors to monitor post-listing developments due to valuation concerns.

ET Intelligence Group: Varmora Granito, a tiles manufacturer, plans to raise ₹320 crore through a fresh issue towards capital expenditure and repayment of borrowings. It will also raise ₹388 crore through an offer for sale. The promoter group's stake will fall to 47% after the IPO from 52%. The company manufactures ceramic and vitrified tiles. About 74% of the revenue is derived from glazed vitrified tiles and technical products. One-fifth of the revenue comes from international markets. The Middle East conflict disrupted the company's export operations due to vessel shortages, potentially affecting overseas sales and increasing logistics-related risks.

Also, the tiles business is energy intensive and uses natural gas and propane. Their availability and cost will be impacted by geopolitical tensions. Further, the company's production facilities are concentrated in Morbi, Gujarat, thereby increasing geographic concentration risks. Given these factors, investors may wait and watch for greater clarity after listing.

ET Bureau

Business

Incorporated in 2003, Varmora Granito operates eight manufacturing facilities in Gujarat. It has a distribution network of 305 exclusive brand outlets and 2,758 multi-brand outlets across India and overseas, along with B2B sales to builders, contractors, developers and government entities. Nearly 82% of the revenue comes from products manufactured in-house and rest comes from third party contract manufacturers. Two-thirds of domestic revenue comes from the B2C retail channel and the remaining is from the B2B channel.

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Financials

Revenue from operations increased 2.6% annually to ₹1,512.5 crore and net profit grew 10.7% annually to ₹55.1 crore. Operating profit before interest, tax, depreciation and amortization (Ebitda) rose 21.4% to ₹221.6 crore while Ebitda margin improved to 14.2% from 10.2% during the period. Cash flow from operations declined from ₹88.3 crore in FY24 to ₹63.2 crore in FY25, before rebounding sharply to ₹234.1 crore in FY26. Return on capital employed increased to 9.9% in FY26 from 7.9% in FY24 and return on equity grew marginally to 6.8% in FY26 from 6.4% in FY24. Net debt declined to ₹2,434.3 crore in FY26 from ₹3,145.7 crore in FY24.

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Valuation

Based on the post-IPO equity and FY26 net profit, the company demands a price-earnings (P/E) multiple of 61. It appears to be on the higher side compared with a P/E of 39 for Kajaria Ceramics, the largest listed tiles company in India which also has higher Ebitda margin at around 18%. Given this and risks arising due to geopolitical risks, investors may wait and watch the developments in the short term.

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