Varmora Granito Limited IPO

01At a glance

What the company does: makes and sells floor and wall tiles, mostly glazed vitrified tiles and "technical" surfaces, plus bathware and adhesives, from eight in-house plants and 304 contract manufacturers (RHP p.23, RHP p.72).

Who pays it: dealers and exclusive showrooms in India, which took 67.33% of FY26 revenue, and overseas customers, 20.54% (RHP p.72). The dealer network had 3,063 outlets at March 2026 (RHP p.141).

Why it is raising money: ₹2,450.00 million of the ₹3,200.00 million fresh issue is to repay borrowings of the company and two subsidiaries; the rest is for general corporate purposes (RHP p.128). Katsura Investments receives the proceeds of the offer for sale (RHP p.127).

How fast it has grown: revenue from ₹14,354.81 million in FY24 to ₹15,124.64 million in FY26, about 2.6% a year; profit for the year from ₹449.35 million to ₹550.93 million, about 10.7% a year (our arithmetic, RHP p.69).

The one thing to understand: the business is large and slow-growing, and its profit is thin: other income of ₹500.64 million, including ₹191.41 million of government grants, compares with a pre-tax profit of ₹766.18 million in FY26 (RHP p.69, RHP p.70).

02The business, in plain words

Varmora mixes clay, feldspar and quartz, presses and fires the mix into tiles in its plants, and sells the tiles through its own branded showrooms, multi-brand dealers and exports to more than 100 countries (RHP p.237, RHP p.28, RHP p.72). It also sources tiles from contract manufacturers; in-house manufacturing was 81.72% of FY26 revenue (RHP p.71).

A home builder picks tiles at a dealer or showroom → the dealer orders from Varmora → Varmora makes or sources the tiles and ships them → the dealer pays on credit terms.

The promoters Pramodkumar Parsotambhai Patel, Bhavesh Vallabhdas Varmora and Hiren R. Varmora have been with the company since 2003; Katsura Investments invested ₹6,403.52 million in FY23 (RHP p.213).

Earnings equation: Revenue ≈ square metres sold × realisation per square metre. Tile sales were 38.34 million square metres in FY26, and tile revenue ₹13,290.58 million, about ₹346.6 a square metre (our arithmetic, RHP p.141).

03Where the money comes from

Source: RHP p.72.

By channel, exclusive showrooms were 18.66% of FY26 revenue, multi-brand outlets 48.67% and tile exports 20.54% (RHP p.72). The prospectus does not name customers or give customer concentration; the top ten suppliers were 8.10% of FY26 expenses (RHP p.27, RHP p.28).

04The growth record

Source: RHP p.69, RHP p.70, RHP p.71. The prospectus computes EBITDA before share of associates and includes other income, and states margins on total income (RHP p.71).

Return on capital employed was 7.95%, 6.32% and 9.89%, and return on equity 6.39%, 4.14% and 6.80% (RHP p.71). Our arithmetic: revenue grew about 2.6% a year from FY24 to FY26, EBITDA about 21.4%, profit for the year about 10.7% and profit to owners about 18.5%; the EBITDA margin rose 397 basis points (RHP p.69, RHP p.71). Trade receivable days were 83 in FY24, 93 in FY25 and 89 in FY26 (RHP p.47).

05What the growth is made of

Mostly mix, not volume. Tile volume rose from 36.12 to 38.34 million square metres, about 3.0% a year, while tile revenue per square metre stayed near ₹346 (our arithmetic, RHP p.141). Within tiles, GVT and technical products rose from 75.37% to 84.19% of tile revenue (RHP p.71). The share made in-house rose from 66.83% to 81.72% of revenue as a new unit started production in April 2024 (RHP p.71, RHP p.236). The dealer network shrank from 3,315 to 3,063 while showrooms spread from 209 to 249 cities (RHP p.141).

06Earnings quality

Operating cash flow is well above profit because depreciation is large: ₹1,059.87 million in FY26, up from ₹616.11 million in FY24 (RHP p.69). The FY26 jump in operating cash flow came partly from ₹376.21 million of inventory released (RHP p.70). Profit to owners exceeds total profit because partly owned subsidiaries lost money (RHP p.69).

07The balance sheet

At March 2026 borrowings were ₹3,579.48 million, net debt ₹2,434.26 million and total equity ₹8,102.16 million (RHP p.38, RHP p.71). Interest coverage was 1.89 times (RHP p.38). Trade receivables were ₹3,826.67 million and inventory ₹2,483.28 million (RHP p.67). Goodwill was ₹332.67 million (RHP p.67). Contingent liabilities include ₹55.31 million of excise claims, ₹25.72 million of GST claims and ₹18.40 million of interim compensation demanded by the National Green Tribunal and the state pollution board over a coal gasifier (RHP p.73).

After the issue: if ₹2,450.00 million of the fresh issue repays debt as planned, borrowings at the March 2026 level would fall to about ₹1,129.48 million (our arithmetic, RHP p.38, RHP p.128).

08What the money is for

Source: RHP p.128. The debt is to be repaid in FY27 (RHP p.128).

Into the business ₹3,200.00 million (fresh issue) (RHP p.127). To the selling shareholder 26,217,634 shares, ₹3,880.21 million at the upper band (our arithmetic, RHP p.64).

09Who is selling

Source: RHP p.6, RHP p.64, RHP p.114; percentage is our arithmetic. Katsura's average cost is ₹74.82 a share (RHP p.111). In November 2025 Katsura transferred 4,39,909 shares to individuals at ₹204.59 a share (RHP p.149).

10Promoters

The promoters are Bhavesh Vallabhdas Varmora, Hiren R Varmora and Pramodkumar Parsotambhai Patel (RHP p.3). Their average costs are ₹2.45, ₹3.01 and ₹4.36 a share (RHP p.111). Together they hold 51,885,030 shares, about 25.4% (our arithmetic, RHP p.114), and the promoter group a further 26.62% (RHP p.117). A director on the board is a principal in Carlyle's Asia buyout group (RHP p.282). One criminal proceeding is pending against a promoter (RHP p.39). Each of the three promoters was paid ₹3.51 million in FY24 and ₹3.53 million in FY26 (RHP p.76).

11Who already owns it

Before the offer, Katsura Investments holds 33.29% of the 204,390,203 shares (RHP p.64, RHP p.114). At an earlier date shown in the prospectus it held 73,734,868 shares, 36.57% (RHP p.115). The promoters hold about 25.4% and the promoter group 26.62% (our arithmetic, RHP p.114, RHP p.117). The capital structure lists shareholders from the extended Varmora and Patel families; this study does not infer relationships beyond those the prospectus states.

12What changed just before the IPO

• Katsura Investments invested ₹6,403.52 million in FY23, through compulsorily convertible preference shares converted into equity in March 2023 (RHP p.213, RHP p.99).
• Face value was split to ₹5 in 2023 and to ₹2 in December 2024 (RHP p.100, RHP p.111).
• A new tile unit started in April 2024, and a joint-venture plant in Tezpur, Assam, recently started (RHP p.236, RHP p.34).
• Depreciation nearly doubled in FY25, to ₹1,194.08 million (RHP p.69).
• Katsura sold 4,39,909 shares at ₹204.59 in November 2025 (RHP p.149).
• Advertising fell from ₹375.59 million to ₹231.61 million (RHP p.71).
• A two-for-one bonus issue of 53,287,496 shares was allotted on August 18, 2023 (RHP p.100).
• The company became a public limited company in May 2025, when the registrar issued a fresh certificate of incorporation on May 14, 2025 (RHP p.3).
• The last allotments before the IPO were made under the ESOP plan on September 3, 2026, at ₹86.68 and ₹2.00 a share (RHP p.102).
• There has been no change of statutory auditor in the three years before the prospectus (RHP p.85).

13Capacity and expansion

Source: RHP p.236. The Nextile, Solaris and Tocco units each ran at about 61% to 63% in FY26; the Solaris unit fell from 105.49% in FY25 to 61.37% (RHP p.235). The ceramic clay unit ran at 69.93% of 118.80 thousand tonnes (RHP p.237). The fresh issue funds no new capacity (RHP p.128).

14Market size and industry structure

As claimed: the Technopak report, commissioned and paid for by the company for this offer, puts the Indian domestic tiles market at ₹531.0 billion in FY25 and ₹554.5 billion in FY26, growing 6.7% a year from FY19 to FY25 (RHP p.23, RHP p.178).

The part that is addressable: domestic tiles and bathware, and exports.

What the company is today: domestic tile revenue of ₹10,183.28 million in FY26, about 1.8% of the report's FY26 domestic market (our arithmetic, RHP p.72, RHP p.178).

15Competitive position

Source: RHP p.144, RHP p.145. Varmora's EBITDA margin of 14.18% compares with Somany's 9.30%, and its profit margin of 3.53% with Kajaria's 9.97% (RHP p.145). The prospectus lists competition as a risk in each product category (RHP p.29).

16Peers the company named

Peers named in the offer document: Kajaria Ceramics, Somany Ceramics, Asian Granito India and Orient Bell (RHP p.140).

Source: RHP p.140; P/E at closing prices of September 11, 2026 (RHP p.139). The peer average is 47.12 (RHP p.139). Kajaria is about three times Varmora's revenue; Orient Bell less than half.

17Valuation at the issue price

At the upper band of ₹148, the fresh issue of ₹3,200.00 million is about 21,621,621 new shares, taking the total to about 226,011,824 (our arithmetic, RHP p.64):

Source: RHP p.64, RHP p.69, RHP p.139, RHP p.71. At the lower band of ₹140 the market capitalisation is about ₹31,814.63 million (our arithmetic, RHP p.64). Enterprise value uses the 204,390,203 shares before the offer and March 2026 net debt of ₹2,434.26 million: ₹32,684.01 million (our arithmetic, RHP p.64, RHP p.71). The prospectus's EBITDA includes ₹500.64 million of other income; without it, EV would be 19.1 times EBITDA (our arithmetic, RHP p.69).

The four named peers traded at 28.55 to 72.00 times earnings, an average of 47.12, on September 11, 2026 (RHP p.139). At the upper band the issue is priced at 48.5 times FY26 diluted EPS. In November 2025 shares changed hands at ₹204.59 (RHP p.149).

18Subscription

Bidding opened on September 22, 2026 and closes on September 24, 2026, per the NSE issue page. This study was written before the first day's bids were published. The lot is 101 shares, ₹14,948 at the upper band.

19Risks, in plain words

Profit depends on other income: other income of ₹500.64 million was 65% of FY26 pre-tax profit (our arithmetic, RHP p.69) → a change in grants or interest income moves profit sharply → government grants alone were ₹191.41 million (RHP p.70).

Plants: 81.72% of revenue came from in-house plants (RHP p.23) → a stoppage at a plant cuts supply → tile utilisation was 72.49% in FY26 (RHP p.236).

Exports: 21.11% of FY26 product sales went abroad (RHP p.28) → trade barriers and freight costs reach revenue directly.

Working capital: receivables of ₹3,826.67 million are about 92 days of revenue (our arithmetic, RHP p.67, RHP p.69) → collections decide cash → credit-loss provisions have swung by ₹194.07 million and ₹210.45 million in single years (RHP p.70).

Fuel and power: gas and power are major inputs (RHP p.33); the industry report expects slower growth in FY27 because of gas supply issues in the last quarter of FY26 (RHP p.178).

Offer-specific: more than half the offer at the upper band goes to the selling shareholder, not the company (our arithmetic, RHP p.64).

20Litigation and regulatory matters

Source: RHP p.39. An environmental compensation demand of ₹18.40 million relating to a coal gasifier is shown as a contingent liability (RHP p.73).

21Related-party transactions

Related-party dealings are small against revenue. In FY26 the company invested ₹180.00 million in Allemby Ceramics, a joint venture, and lent it ₹55.00 million, of which ₹40.00 million was repaid (RHP p.75). Purchases from the associate Fiorenza Granito were ₹196.32 million in FY24 and ₹39.75 million in FY26 (RHP p.75). The prospectus notes that subsidiaries, associates and joint ventures have common pursuits with the company (RHP p.26).

22What the offer document does not say

Customer concentration is not disclosed. The split of volume between in-house and contract-manufactured tiles is not given in the pages read. The reason for the Solaris unit's fall in utilisation from 105.49% to 61.37% is not given in the pages read. The general corporate purposes amount and offer expenses are left blank.

23Five questions for management

1. What share of FY26 pre-tax profit would remain without the ₹191.41 million of government grants, and how long do those grants run?
2. Why did the Solaris unit's utilisation fall from 105.49% to 61.37% in FY26?
3. How much interest will the ₹2,450.00 million debt repayment save in a full year?
4. Which subsidiaries produced the ₹69.64 million of minority losses, and when are they expected to break even?
5. Why did the dealer network shrink from 3,315 to 3,063 while showroom cities rose from 209 to 249?

1Sources and cited facts

This study was read from 1 document the company filed. The 83 figures it cites are listed under the document each came from, with the page and the sentence as printed.