Varmora Granito opened for subscription on Monday, 22 September, and closes on Wednesday the 24th. Morbi-based tile maker, real scale, real brand in glazed vitrified tiles. The question with any IPO is never whether the business is fine. It is whether the price is. So here is the same walk I do for every issue: growth, returns, who is selling, where the money goes, what the peers cost, and what could go wrong.
The issue in one table
| Price band | ₹140 to ₹148 |
| Issue size | ₹708 crore |
| Fresh issue | ₹320 crore (45%) |
| Offer for sale | ₹388 crore (55%), Katsura Investments |
| Lot | 101 shares, ₹14,948 at the top of the band |
| Dates | Opens 22 Sep, closes 24 Sep, listing 29 Sep |
| Post-issue P/E at ₹148 | 60.7x on FY26 earnings |
Growth: the three-year test
The RHP carries audited numbers up to March 2026, so we get three full years.
| ₹ crore | FY24 | FY25 | FY26 |
|---|---|---|---|
| Revenue | 1,473 | 1,493 | 1,563 |
| EBITDA | 150 | 198 | 222 |
| EBITDA margin | 10.2% | 13.3% | 14.2% |
| PAT | 44.9 | 30.8 | 55.1 |
Revenue grew 1.4% in FY25 and 4.7% in FY26. Margins have improved, from a low base, as the mix moved towards premium glazed vitrified tiles. Profit fell in FY25 and then rebounded in FY26, the year the company went to market. That pattern, a flat top line with the best profit in the IPO year, is the one I always look at twice. It is not proof of anything. It is a reason to ask what changed in FY26 and whether it repeats.
Return on capital employed in FY26 was 9.9%. For a manufacturing business carrying ₹358 crore of borrowings, single-digit ROCE means the capital is not yet earning its keep.
Who is selling and where the money goes
Fifty-five percent of this issue is an offer for sale by Katsura Investments. The company itself receives ₹320 crore, less than half the headline number. Of that, ₹245 crore is earmarked to repay or prepay borrowings.
Borrowings were ₹413 crore in FY24, rose to ₹505 crore in FY25, and came down to ₹358 crore in FY26. Paying down ₹245 crore more will help the interest line, and interest against ₹55 crore of profit is manageable rather than dangerous. But note what this means: the fresh money is going to the balance sheet, not to growth capacity. A deleveraging IPO is a legitimate use of public money. It is also a slower story than "we are raising to expand".
The RHP does not give a per-share cost of acquisition for the seller that I could verify from public summaries, so I am not going to quote one. What I can say is that a majority-OFS structure means the seller's outcome is settled at ₹148 on listing day, and yours is not.
What the peers cost
This is where the case is decided. At the top of the band Varmora is asking 60.7 times FY26 earnings. The RHP's own peer table has Kajaria Ceramics at 40.3x and Somany Ceramics at 28.6x. On today's price Kajaria trades at about 34.5x.
So the new entrant, with revenue growth in the low single digits and sub-10% ROCE, is priced at a higher multiple than the market leader with a national footprint. The industry average in the RHP peer set is 47.1x, pulled up by smaller names, and Varmora is above that too.
One correction on my own account: the version of this analysis I posted on X on Monday morning carried Kajaria and Somany at 26.6x and 22.6x. Those numbers were wrong. The RHP table says 40.3x and 28.6x, and the correction is in a reply under the post. The conclusion does not change, Varmora is still asking more than the leader, but the gap is narrower than I first wrote, and you should have the right numbers.
Flags
Concentration: all eight plants are in Morbi. That is where the Indian tile industry lives, and it is also one weather event or one gas-supply disruption away from the whole company pausing at once.
Product: glazed vitrified tiles are the bulk of revenue. One product line, one premium segment, one input contract for piped gas.
Costs: power and fuel run around 21% of the cost base. Gas prices move; tile prices do not always follow.
Working capital: the cash conversion cycle is 96 days (about 65 debtor days, 85 inventory days, 54 payable days). That is a lot of cash tied up for a business earning 9.9% on capital.
Grey market and subscription
GMP was ₹9 to ₹12 last week and about ₹5 on Monday, a 3% premium. I treat GMP as a mood reading, not a valuation input, and the mood has cooled into the open. Day-one subscription data was thin at the time of writing.
Verdict
At 60x earnings on low single-digit growth, sub-10% ROCE, a majority-OFS structure and proceeds going to debt, the price is doing the heavy lifting for the seller. I am not subscribing at the band. If it lists and drifts towards the peer multiple, the business is worth a second look then, with the FY27 first-half numbers in hand.
Educational purposes only, not investment advice. DYOR.
Sources: Varmora Granito Limited Red Herring Prospectus (restated consolidated financials FY24 to FY26, objects of the issue, peer comparison) as summarised by Chittorgarh and IPOGram, 21 and 22 September 2026; Value Research, Kajaria Ceramics quote and trailing P/E, 22 September 2026; Multibagg and InvestorGain grey market premium, 22 September 2026; Kotak Neo IPO note, September 2026.
Follow along: @tyrovirtuoso on X