Kusumgar Ltd. IPO

Kusumgar

• Kusumgar is coming out with a 100% book building; initial public offering (IPO) of 1,63,41,209 shares of face value Rs 1 each in a price band Rs 398-419 per equity share. 
• Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
• The issue will open for subscription on July 8, 2026 and will close on July 10, 2026.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 1 and is priced 398 times of its face value on the lower side and 419 times on the higher side.
• Book running lead managers to the issue are Axis Capital, IIFL Capital Services and Motilal Oswal Investment Advisors.
• Compliance officer for the issue is Devanand Parshottam Mojidra.  

Profile of the company 

Kusumgar is a manufacturer of woven, coated and laminated synthetic fabrics, referred to as engineered fabrics. It offers engineered fabrics and solutions focusing on polyamides and polyester filaments and polyurethane chemistry that cater to the high-performance requirements of its customers. Its expertise is manufacturing fabrics where critical performance parameters include tensile strength, tear strength, abrasion resistance, comfort, airpermeability, and water proofing, among others. 

The company has leveraged its process knowledge and product development expertise to manufacture unique fabric configurations to build a niche around synthetic functional and performance fabrics, addressing growing demand in the aerospace and defence, industrial and automotive, and outdoor and lifestyle segments. In recent years, the company has built on its expertise and industry knowledge to expand into manufacturing finished products for aerospace and military applications, such as parachute systems, stealth solutions, and rapid deployment systems.

The engineered fabrics industry is an industry that requires precision and a high level of technical know-how. It leverages its technical strengths and partnerships to focus on high-technology applications. Its business model drives profitable growth, and it is poised for continued growth, driven by exports, global supply chain shifts, modernisation and indigenisation of military equipment, expanded product lines and technological innovations. It manufactures products primarily for four market segments: (i) Aerospace and Defence Fabrics; (ii) Aerospace and Defence Solutions; (iii) Industrial and Automotive Fabrics; and (iv) Outdoor and Lifestyle Fabrics, each of which has high entry barriers

Proceed is being used for: 

• The object of the offer is to carry out the offer for sale of equity shares of face value of Rs 1
• Achieving the benefits of listing the equity shares on the stock exchanges

Industry overview

Engineered fabrics are a subset of technical textiles, which are advanced textiles designed to deliver functional performance rather than just aesthetic appeal, serving specific industrial, commercial, and protective needs. Amongst the different categories of technical textiles, engineered fabrics are specially developed and custommade textiles designed through advanced manufacturing techniques to meet specific functional requirements and, beyond functionality, are created for enhanced performance in specialised applications. They are characterised by superior properties such as durability, moisture resistance, breathability, flexibility, and high tensile strength. Engineered fabrics are also different from conventional fabrics, which are created with aesthetic appeal and comfort as the primary considerations.

India’s engineered fabrics industry, as measured by domestic consumption (including imports) and excluding exports, was valued at Rs 558.8 billion ($6.3 billion) in Fiscal 2020 and reached Rs 990.0 billion ($11.2 billion) in Fiscal 2026, growing at a CAGR of 10.0% during Fiscal 2020-2026. The market is expected to grow further and reach a value of Rs 1,864.7 billion ($21.1 billion) by Fiscal 2031, registering a CAGR of 13.5% during Fiscal 2026-2031. In Fiscal 2026, the industrial and automobile segment dominated the Indian engineered fabrics industry, as measured by domestic consumption (including imports) and excluding exports, with a 56.6% share, followed by the outdoor and lifestyle segment at 32.6%, and the defence and aerospace segment at 5.9%. By Fiscal 2031, the industrial and automobile segment is projected to rise to 57.8.8%, while the outdoor and lifestyle segment is expected to account for 27.9%, and the defence and aerospace segment to 7.8%.

The Indian engineered fabrics industry, as measured by domestic consumption (including imports) and excluding exports, is growing through strong government policies, R&D advancements in high-speciality fabrics, an expanding global market (due to factors including the diversification of supply chains by major manufacturers), increased adoption of sustainable, high-tech textiles and the diversification of supply chains by major manufacturers. Standardisation and quality control measures are also driving domestic production and export competitiveness, while India leverages the China+1 strategy to position itself as a reliable alternative manufacturing hub for global buyers seeking supply chain diversification.

Pros and strengths 

Technical capabilities allow to develop and supply unique solutions for customers: The company offers synthetic engineered fabrics and solutions that cater to the high-performance requirements of its customers. It has strategically focused on building a niche around synthetic functional and performance fabrics, addressing growing demand in the aerospace and defence, industrial and outdoor sectors. Its core expertise lies in working with polyamide and polyester filaments and polyurethane chemistry. Its most salient technical strengths are: (i) its light fabrics made of fine denier yarns; (ii) its ability to handle Nylon 6 and Nylon 66; (iii) its complex fabric engineering; (iv) its coating and lamination capabilities; and (v) its integrated fabric value chain.

Long-standing relationships with key customers: The company has long-standing relationships with its key customers, which allows it to increase its wallet share. In Fiscal 2026, its top six customers accounted for Rs 3,330.34 million, or 49.35%, of its revenue from contracts with customers.

Its track record has given it access to technology and markets through partnerships: The company has partnerships which increase the value of its business by creating moats around business opportunities. These relationships also help ensure a continuous stream of opportunities. Through licensing and co-development arrangements, it gains access to proprietary technologies and specialized know-how that accelerate its product development cycles and allow it to participate in the programs of its partners which are often global in scope and highly sophisticated. These partnerships enhance its credibility with both government and private sector customers, opening doors to new tenders and programs that may otherwise be inaccessible to other players.

It operates in markets with high entry barriers: Since 1970, it has developed and manufactured over 1,000 unique engineered fabrics. Market entry barriers for its products are high and include (i) technical knowledge, (ii) long product approval cycles, (iii) customized solutions, (iv) partnerships with leading brands and manufacturers, (v) customer loyalty for life-preserving features, and (vi) manufacturer size and infrastructure.

Risks and concerns

Dependent on Aerospace and Defence Fabrics, Aerospace and Defence Solutions, and Industrial and Automotive Fabrics segments: The company is highly dependent on its Aerospace and Defence Fabrics, Aerospace and Defence Solutions, and Industrial and Automotive Fabrics segments. The company derived 31.67%, 24.43% and 22.97% of its revenue from contracts with customers for Fiscal 2026 from its Aerospace and Defence Fabrics, Industrial and Automotive Fabrics, and Aerospace and Defence Solutions market segments, respectively. If there is any decline in demand for aerospace and defence fabrics, industrial and automotive fabrics, and aerospace and defence solutions, it could have a material adverse effect on its business, financial condition, results of operations and cash flows

Significant revenue contribution from top 10 customers: The have derived and expect to continue to derive a significant portion of its revenue from its top 10 customers, which exposes it to customer concentration risks. The company's top ten customers contributed 59.52%, 84.69%, and 80.18% of its revenue from contracts with customers for Fiscal 2026, Fiscal 2025, and Fiscal 2024, respectively. The company generally does not have long-term agreements with its customers and it did not have long-term agreements with any of its top 10 customers for Fiscals 2026, 2025 or 2024. As a result, its top customer generally varies from year to year, leading to volatility in its top customer contribution. Any decrease in sales to such customers or the loss of such customers could have an adverse effect on its business, results of operations, financial condition and cash flows.

Export revenue vulnerable to global market risks: The company’s exports to international markets accounted for 39.99%, 23.22% and 25.62% of revenue from contracts with customers for Fiscals 2026, 2025 and 2024, respectively. As an exporter, it is particularly exposed to risks arising from changes in government regulations or policies affecting international trade. For Indian exporters, higher tariffs could dampen business sentiment and reduce international demand for manufactured products. Countries impose, modify, and remove tariffs and other trade restrictions in response to a diverse array of factors, including global and national economic and political conditions, which make it impossible for the company to predict future developments regarding tariffs and other trade restrictions. Any changes in government regulations or policies affecting international trade or any downturn in the macroeconomic environment or geopolitical risks in India, the United States or the European Union may have an adverse effect on its business, results of operations and financial condition.

Regional disruptions in Gujarat may adversely impact manufacturing facilities: All six of its manufacturing facilities are in Gujarat. Due to the geographic concentration of its manufacturing facilities, its operations are susceptible to local and regional factors, such as economic and weather conditions, natural disasters, political changes and other unforeseen events and circumstances. Further, any such adverse development affecting continuing operations at its manufacturing facilities could result in significant loss due to an inability to meet production schedules, which could adversely affect its business, results of operations, financial condition and cash flows. 

Outlook  

Kusumgar is a specialist in the engineered fabric industry with a history of successfully delivering bespoke solutions to customers. The company manufactures specialised products using advanced technical processes, making it difficult to replicate comparable products. The company has been a pioneer in the engineered fabrics industry for certain unique fabric configurations, such as parachute fabric. Kusumgar is also recognised as one of the major players in military parachute fabrics outside the United States and China, and as one of the major manufacturers domestically of high-performance technical fabrics for parachutes, heddle belts and spindle tapes, with a limited number of companies selling such products in comparable quantities. On the concern side, in order to get better pricing by buying in larger volumes, it generally buys the primary materials it needs from a few suppliers. For Fiscal 2026, its cost of materials consumed purchased from its top 10 suppliers represented 51.42% of its cost of materials consumed. It has not entered into long-term agreements with these suppliers and if any of its top 10 suppliers ceased selling it the materials it requires in the quantities it needs, and it was unable to find a supplier to replace it, it could have a material adverse effect on its business, financial condition, results of operations and cash flows.

The issue has been offering 1,63,41,209 shares in a price band of Rs 398-419 per equity share. The aggregate size of the offer is around Rs 650.38 crore to Rs 684.70 crore based on lower and upper price band respectively. On performance front, its revenue from operations decreased by 11.17% to Rs 6,920.03 million for Fiscal 2026 from Rs 7,789.97 million for Fiscal 2025. Its profit for the year decreased by 12.31% to Rs 982.00 million for Fiscal 2026 from Rs 1,119.88 million for Fiscal 2025.

Meanwhile, the company will continue to invest in its capabilities and people to support growth, research and development, and efficiency improvement. It will continue to recruit new industry and product-related experts and to promote its culture of continuous improvement and relentless innovation. This new expertise will combine with its existing teams to enhance research and development efforts leading to new products, novel product-specific technologies and increased conversion rates. It outsources certain processes, including weaving, knitting, finishing and fabrication, wherever there is limited differentiation. It will continue to use such outsourcing where feasible and economical to improve the efficiency of its own assets. It will continue to update its machines to the best technology available and to automate wherever possible.