Yajur Fibres Limited ipo

Yajur Fibres is in the business of transforming raw bast fibers from crops like jute, flax, hemp, and ramie into cotton-like yarns. These specialized yarns find their way into apparel, mats, mattresses, and various fabrics. While the company has been around since 1980 under a different name, its current manufacturing setup, acquired on 19 acres, is relatively recent. The upcoming SME IPO, set to open from January 6-9, aims to raise ₹120 crore through a fresh issue, valuing the company at a substantial ₹400 crore with shares priced at ₹174. The funds are earmarked for capacity expansion and working capital, alongside an investment in its subsidiary, Yashodha Linen Yarn. Post-IPO, promoters will retain about 70% ownership, yet there’s no offer for sale. My primary concern stems from the valuation; a P/E of around 40x and a P/B of 2.7x stands in stark contrast to industry peers like Jell Fibres (12x P/E), Fibre Web (6x P/E), Sarla Performance (11x P/E), and Shyan (15x P/E), who trade at significantly lower multiples. Operationally, the company has seen revenue growth, but recent reports of poor crop yields and raw material shortages (largely imported) are projected to impact future figures, having already caused a dip in capacity utilization. Furthermore, a host of financial red flags include high inventory levels, past related-party transactions potentially inflating revenue, minor criminal cases, a reduced bank guarantee, weak debt-to-equity ratios, rising short-term borrowings and payables, and consistent negative cash flows. These issues, combined with the exorbitant valuation, make it a high-risk proposition, regardless of any potential short-term listing gains.