Sanitaryware maker Varmora Granito, supported by private equity firm Carlyle Group, plans to raise $100-150 million before going public, according to two people familiar with the matter.
The fundraising, which will include both new and existing shares from private equity investors, could value Varmora at around ₹5,000 crore (approximately $600 million), the sources said.
Interest from Investors
“There’s strong interest from funds keen to invest in the company,” one of the sources noted.
The Morbi, Gujarat-based company aims to list on Indian stock exchanges in the next 18-24 months. Investors like GIC and 360 One are among those interested, the second source added.
“Carlyle is expected to sell some of its stake in this funding round and will also reduce its holding during the IPO,” said the source. Both individuals asked to remain anonymous.
Investor Enthusiasm for IPO-bound Firms
The move highlights growing interest from investors in private companies preparing for IPOs. Other companies like FirstCry, Oyo, Ixigo, and Ola Electric have seen similar interest recently.
Varmora did not respond to emailed questions. Spokespersons for Carlyle and 360 One declined to comment, and GIC also did not reply.
Carlyle’s Investment in Varmora
Two years ago, in July 2022, Carlyle invested $100 million to buy a significant minority stake in Varmora from its founders, though the valuation was not disclosed.
At that time, Varmora announced plans to use Carlyle’s investment to strengthen its brand, enhance digital marketing, expand its distribution network, and improve product innovation and capacity.
Carlyle is also looking to reduce its stakes in other investments in India, including Yes Bank, Airtel’s data centre business, and VLCC.
Varmora’s Growth Story
Founded in 1994 by brothers Naranbhai and Ramanbhai Varmora, who started as traders of Mangalorean rooftiles, Varmora’s products now include premium tiles, faucets, and sanitaryware.
The company has over 200 exclusive brand outlets in India and a marketing and distribution network in more than 74 countries.
Financial Performance
According to an April 2024 Care ratings report, Varmora Granito reported a 26.61% year-on-year growth in total operating income to ₹1,342.29 crore in FY23, up from ₹1,058.33 crore the previous year. Its export sales increased to ₹264.52 crore in FY23, compared to ₹198.61 crore the year before.
Varmora’s profit before interest, lease rentals, depreciation, and taxation (PBILDT) margin and profit after tax (PAT) margin remained stable at 10.6% and 4.8% in FY23.
The group also saw a 32% rise in gross cash accruals to ₹113.97 crore in FY23, compared to ₹70.01 crore in FY22. In the first nine months of FY24, Varmora reported total operating income and PBILDT of around ₹985 crore and ₹104 crore, according to provisional results.
Expansion in Production Capacity
Since the start of operations at its new subsidiary, Covertek Ceramica Private Limited, in FY22, Varmora’s production capacity increased to 32.2 million square metres per annum for vitrified and ceramic tiles in FY23, up from 28.95 million square metres per annum in FY22. The company also produced 750,000 sanitaryware pieces per annum in FY23.
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