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A new, fairly interesting business is coming up for an IPO — Qualiance International 💡 What caught my attention is the nature of the business: a Tiruppur-based manufacturer of technical/performance garments, with ~99% of revenue coming from exports, and a planned capacity expansion that would take total installed capacity from 4.5 lakh to ~15.3 lakh pieces ( ~3.4x the current base). They are raising ~₹45 Cr through a 100% fresh issue, with ~₹38 Cr going towards setting up the new manufacturing facility in Tiruppur. The IPO is priced at PE 14.4x FY26 PAT post money. Here’s a quick look at the business: 1. What does Qualiance do? Qualiance isn't a typical apparel exporter making basic T-shirts or shirts. It makes technical garments — military uniforms, tactical outerwear, waterproof/all-weather jackets, high-visibility workwear, police & border patrol uniforms, protective workwear and performance activewear. The customer generally provides the design/specifications/technical drawings, while Qualiance works on the engineering, material compatibility and manufacturing required to produce the final garment. 2. Brief Journey 1994: Founded as a generic partnership firm, doing basic "cut-and-sew" apparel. 2001: Partnered with the Swiss Army to develop their new clothing collection, initiating a steep learning curve in material compatibility and engineering. 2006: Converted to a private limited company. 2017: Built its first dedicated factory in Tiruppur, Tamil Nadu. 2025: Officially converted to a public limited company. 3. Why is the product different? A technical jacket can involve multiple layers/materials, waterproof membranes, insulation, specialised adhesives etc. Qualiance has capabilities such as: • Seam sealing • Bonded/stitch-free construction • Ultrasonic welding • Laser cutting • Lamination • Reflective fusing • Quilting & down filling The company also carries out testing for things such as seam leakage, shrinkage, washing/rubbing fastness and button pull strength. Its FY26 average realisation was over Rs.1900/garment, versus roughly ₹400-500 for a typical Indian garment exporter — essentially reflecting the much higher complexity/value addition in its products. 4. Customers & markets This is where the business becomes interesting — and also where one of the biggest risks lies. FY26 revenue by geography: Switzerland — 80.67% USA — 16.60% UK — 1.54% India — 1.18% Government of Switzerland departments alone contributed ₹60.45 Cr (79.24%) of FY26 revenue. The company has supplied to Swiss Army, Railways, Customs and Police. Management also says it is in discussions with European, US and Canadian private brands for technical outerwear. Importantly, these are prospective opportunities as the new facility is up and running, not current customers. 5. Manufacturing Current facility is in Tiruppur, with: • 45,000+ sq ft built-up area • 4.5 lakh pieces/year installed capacity • 240 sewing machines • In-house manufacturing rather than outsourcing The company says essentially all exported garments are engineered and manufactured in its own facility. The important part isn't just the sewing capacity, but the specialised processes and quality systems built around it. 6. The big expansion The IPO is primarily funding a new Tiruppur facility. Planned facility: • ~1.43 lakh sq ft, 4 floors • 600 sewing machines • ~10.8 lakh pieces/year capacity • ₹38 Cr of IPO proceeds allocated towards it So total installed capacity could move from 4.5 lakh → ~15.3 lakh pieces, or roughly 3.4x. The land has been acquired and approvals are in place with construction to begin in Sept'26 itself. This capacity is expected to come live by the first half of FY28. The key thing to track would be: how quickly does this capacity get filled, and at what realisation/margin. 7. Financials The numbers have improved meaningfully over the last 3 years — revenue has more than doubled from ₹37 Cr to ₹77 Cr, while PAT has grown over 4x from ₹2.8 Cr to ₹11.9 Cr. The bigger takeaway is the operating leverage: EBITDA margin expanded from 13% to 22%, while PAT margin moved from 7.6% to 15.4%. FY26 alone saw 45% revenue growth and 142% PAT growth. At the ₹127 upper band, it is valued at roughly 14.4x FY26 earnings. 8. Why does it look interesting? A niche within a large export industry: India is already the 6th-largest textile & apparel exporter globally, with textile & apparel exports of ~₹3.25 lakh Cr in FY26. The industry also has a large manufacturing ecosystem, skilled labour base and government push towards technical textiles and higher-value manufacturing. Moreover, there is also a China + Bangladesh angle worth watching. China faces increasing trade/geopolitical and tariff considerations in Western markets, while Bangladesh's advantage is strongest in large-scale, labour-intensive basic apparel. Bangladesh has also faced recent tariff, labour and political challenges. This creates an interesting space for Indian manufacturers like Qualiance. Qualiance sits in an interesting part of the garment export market — technical, performance-oriented garments where manufacturing capabilities and compliance matter more than simply competing on cost. It has built a 20+ year relationship with Swiss government and institutional customers, while FY26 also showed strong growth in volumes and realisations. Now, the company is expanding its capacity to ~3.4x and is simultaneously looking to broaden its customer base across private brands in multiple export markets like Europe and America. With ~99% of revenue already coming from exports, the new facility could give the company room to scale its existing business while moving into a larger addressable customer base. This is the part of the story that makes the company worth watching: a specialised export manufacturing business, with proven customers and improving economics, entering a fairly significant capacity-expansion phase. It will be key to track the onboarding of private brands to utilize its new upcoming caapcity. 9. Key risks The biggest risk is customer concentration — the top customer contributed ~57% of FY26 sales and the top 5 ~97%.  There is also significant geographic concentration, with 98.8% of revenue coming from exports and ~81% from Switzerland. On the input side, ~60% of raw-material purchases were imported in FY26, exposing the company to currency movements, freight costs, tariffs and supply-chain disruptions.  The other key question is execution of the new capacity — the company is nearly 2.4x-ing its current capacity, so delays/cost overruns or slower-than-expected customer additions could impact returns. And after the sharp FY26 jump in margins, sustainability of the current 15.4% PAT margin will be something to watch. The new capacity could also help address some of these risks, as the company is looking to use the additional capacity to onboard private outdoor/performance-wear brands and expand into new geographies, particularly Europe and North America. The key will be how successfully these prospective customers translate into actual orders. 10. Management Promoter-led business. Vipul Badani, Chairman & MD, is a textile engineer with 30+ years of experience. Bhoomin R. Badani, Whole-Time Director & CEO, has 15+ years of apparel manufacturing experience. It is effectively a first/second-generation promoter setup. Conclusion: Overall, Qualiance is an interesting specialised export manufacturer with a clear capacity-led growth opportunity ahead. FY27 could be relatively flat as the existing facility is already running close to capacity, but the 10.8 lakh-piece new facility should create a much larger growth runway once it comes on stream. If utilisation ramps up over the next 2–3 years, the company has the potential to grow meaningfully from the current base, while new private-brand customers and geographies could also reduce its current concentration. The key will be execution, filling the new capacity while maintaining the margins and customer quality it has built so far. Disclosure: This post is for informational purposes only and is not a recommendation to buy or sell. Please do your own due diligence (DYDD) before making any investment decision. #Qualiance #SME #SMEIPO #Export

Qualiance International SME IPO Review 🧵 Closing Tomorrow. Verdict: Applying for Listing Gains (High Chances of 90% Listing Gains)+ Long Term Qualiance looks interesting on both growth and valuation. Revenue has more than doubled in 2 years, while PAT has grown more than 4x. At the upper band, the IPO is valued at around 14.4x post-issue FY26 earnings, which looks reasonable for the growth profile. 🏭 Business Model Qualiance International is an export-oriented manufacturer of technically complex performance garments. It designs, manufactures and exports garments used across: Military & defence Government/institutional requirements Extreme-weather and protective clothing International apparel brands Its portfolio includes high-altitude combat gear, polar expedition layers and specialised workwear. Customers/brands disclosed by the company include Swiss government agencies, SBB, Coolibar, Skechers and others. The company currently operates from Tiruppur and plans to utilise ₹38 crore of the IPO proceeds for a new manufacturing facility, which could materially increase capacity. 🚀 Strengths 1. Niche export business Technical garments, defence-related clothing and specialised workwear have higher entry barriers than conventional apparel manufacturing. 2. Capacity expansion ₹38 Cr of the ₹45.11 Cr issue is earmarked for a new Tiruppur manufacturing facility. Successful execution can provide the next leg of growth. ⚠️ Risks Customer concentration is the BIGGEST risk. Top customer contributed 56.93% of FY26 sales and the top 10 customers contributed 99.65%. Geographical concentration: Switzerland accounted for 80.67% of revenue, while exports represented ~98.8% of FY26 revenue. Other risks: Dependence on purchase orders rather than long-term contracts Heavy dependence on woven garments Imported raw-material exposure 📊 Financials FY24 → FY26: Revenue: ₹38.14 Cr → ₹55.06 Cr → ₹80.95 Cr PAT: ₹2.84 Cr → ₹4.90 Cr → ₹11.87 Cr EBITDA: ₹4.86 Cr → ₹7.97 Cr → ₹16.72 Cr So, over two years, revenue grew a 112%, while PAT grew by more than 4x. At ₹127, post-issue market cap is approximately ₹170.8 Cr, translating to around 14.4x FY26 post-issue earnings. 🏦 Lead Manager Track Record Hem Securities Ltd. is the Book Running Lead Manager. Available IPO databases show a strong SME track record. MarketPing currently tracks 48 Hem-led IPOs, with 47 having price history, and reports a +27.7% median return since issue price across those priced issues. Another database reports Hem Securities has handled 149 SME IPOs, with around 88% listing with gains—though methodology and the exact universe can differ across databases. *Disclaimer: This is for educational/informational purposes only and is not investment advice. SME IPOs carry higher liquidity and volatility risks. Please read the RHP and assess your own risk before investing. #Qualiance #SME #IPO