Kusumgar Limited IPO

The ₹650-crore offer is entirely an Offer for Sale (OFS) by promoter selling shareholders — Siddharth Yogesh Kusumgar, Sapna Siddharth Kusumgar, and the Siddharth Yogesh Kusumgar HUF. The company will not receive a single rupee. Pre-IPO promoter holding is 90.48 %.

The price band is ₹398–₹419 per share, with a lot size of 35 shares. The issue opens on 8 July 2026 and closes on 10 July 2026, with a mainboard listing on BSE and NSE.

IPO Snapshot

All financial figures in this note are sourced exclusively from the restated consolidated DRHP disclosures. No investment advice is intended.

Kusumgar Limited is an engineered fabrics manufacturer. Unlike ordinary cloth, engineered fabrics are designed for specific jobs – they must be waterproof, fireproof, ultra-light, tear-resistant, or able to survive extreme cold. The company takes synthetic yarns (nylon, polyester, etc.) and weaves, coats, or laminates them into high-performance textiles. It then sells either the fabric itself or finished products made from it, such as complete parachute systems or camouflage nets.

1. Aerospace & Defence Fabrics – This is the heritage business. The company makes fabric for parachutes, tactical clothing, rucksacks, and stealth systems (e.g., camouflage nets). It is a major supplier to an Indian government customer and also exports.

2. Aerospace & Defence Solutions – Here the company assembles finished systems, not just fabric. Products include complete parachute packs (e.g., Combat Free Fall systems), inflatable decoys, and shelters.

3. Industrial & Automotive Fabrics – Fabrics for wire-harness tapes (used in cars), mechanical rubber goods (belts, hoses), inflatable rafts, and custom industrial solutions. This segment grew 46% in FY26, driven by export orders, and is more stable than the defence segments.

4. Outdoor & Lifestyle Fabrics – Performance fabrics for sportswear, rainwear, backpacks, luggage, and tents. The company supplies brands like Decathlon (via fabricators). This segment doubled in FY26, helped by the "China plus one" sourcing shift – global brands are seeking Indian suppliers.

5. Other Sales – A small portion from sale of yarn, chemicals, and job work.

Key point for retail investors: Nearly all sales are on purchase orders – there are no long-term contracts. The defence segments can swing wildly because they depend on the timing of large government orders. The FY26 decline was not a demand problem — the company booked a massive new order in A&D Solutions — but a timing/execution problem that shifts revenue into FY27.

Revenue grew 66 % in FY25 before shrinking 11 % in FY26. EBITDA margin recovered to 27 % in FY26, but PAT margin (on total income) slid from 17.78 % to 13.80 % over the three years as depreciation and finance costs swelled. RoNW collapsed from an unsustainable 86 % to 26 % after a large equity infusion in FY26. Net debt, once negative, climbed to ₹175.52 crore, though still modest relative to EBITDA. The headline numbers hide the cash‑flow stress examined in the next section.

Customer Revenue Distribution:
- Top 1 customer: 11.13% of FY26 contract revenue (₹751.27 million)
- Top 5 customers: 45.38% of FY26 contract revenue
- Top 10 customers: 59.52% of FY26 contract revenue

At Floor Price of ₹398, the diluated EPS of ₹9.31 comes out to be 42.7× and at the Cap Price ₹419, the PE is 45.0× .

Kusumgar at 42.7×–45.0×, above the peer average of 38.76× and the peer median of 39.80×. At the cap price, it is above SRF (43.77×), the highest peer P/E sitting at a valuation range of ₹4,178.66 to ₹4,399.14 crores.

Kusumgar is the only pure‑play engineered fabrics manufacturer in the peer set — the others are diversified conglomerates.

• Garware Technical Fibres: Application-focused technical-textile solutions across aquaculture, fisheries, sports, geosynthetics, agriculture, industrial, coated fabrics, material handling, defence, and government. Global footprint
• Arvind Limited: Multi-business operator: fabric & apparel, brands & retail, real estate, engineering, environmental solutions, advanced materials, telecom, and garmenting. Textiles is only one division.
• SRF Limited: chemicals conglomerate, diversified across 4 main segments—Fluorochemicals, Specialty Chemicals, Packaging Films, and Technical Textiles

Revenue & Profitability (₹ million, consolidated)

Kusumgar is the smallest among the peers growing faster than the peers but at a slower pace than previous years. It's EBITDA Margin is also best among the peers. But, its revenue is less diversified compared to its peers and while exports have been growing recently, it is still lesser than the peers.

EBITDA Margin (%)

Valuation Snapshot of competitors (as of 19 June 2026, from DRHP)

• Customer concentration with no contracts: The top five customers account for 45.38 % of revenue, and every order is a one‑off purchase order. A sudden loss of a large customer would slash revenue overnight.
• Working‑capital strain: Receivable days at 123 and a 90‑day working‑capital cycle demand continuous external funding; the CARO flag on short‑term funds used for long‑term purposes confirms the pressure.
• Earnings‑quality red flags: Operating cash flow covers only 25 % of cumulative PAT, and the explosive receivable growth while revenue fell is consistent with channel stuffing.
• Governance concerns: Related‑party transactions have jumped to 11.29 % of revenue, promoter loans were taken and repaid within FY26 generating interest payments, the ECFPL acquisition transferred ₹111.85 crore to promoters just months before the IPO, and the parent's standalone statements are absent — all clouding transparency.
• Contingent liability surge: The new ₹103.88‑crore bank guarantee equals 20.7 % of net worth; if called, it would severely strain the already tight liquidity.
• Geographic manufacturing concentration: All six factories are in Gujarat; a single regional disruption could halt output.
• Low capacity utilisation: Processing utilisation at 49.50% and weaving at 62.51% mean the company is carrying large fixed costs relative to output, weighing on margins until new capacity is filled.
• Lumpy order book: The only disclosed pending order is a single large defence contract; the lack of a diversified order book amplifies revenue uncertainty.