# What Is Kusumgar? Kusumgar is a specialized engineered fabric manufacturer, not a regular textile company. It manufactures high-performance woven, coated, and laminated synthetic fabrics for critical applications such as parachutes for the Indian Army, camouflage nets, industrial belts, and outdoor gear. The company has been operating since 1970 and has been the primary supplier of parachute fabrics to the Indian government. The Kusumgar IPO opens **Wednesday, July 8, 2026** and closes **Friday, July 10, 2026**, with a **price band of ₹398-₹419 per share** for a **₹650 crore issue**. The IPO is entirely an **Offer for Sale (OFS)** with a minimum lot size of **35 shares** (₹14,665 for retail investors). The company specializes in polyamide, polyester, and polyurethane-based woven, coated, and laminated fabrics engineered for extreme performance characteristics such as tensile strength, abrasion resistance, and waterproofing. With over **1,000 unique fabric SKUs** and a workforce of **2,000+ employees**, Kusumgar serves some of the most demanding end-use industries. ### Key Product Categories - High-performance engineered fabrics for defence and aerospace - Parachute systems, stealth materials, and camouflage nets - Deployable shelters and rapid deployment systems - Industrial, automotive, and outdoor lifestyle fabrics --- # Business Segments & Revenue Mix (FY26) | Segment | Revenue Contribution | |----------|---------------------:| | Aerospace & Defence Fabrics | 31.67% | | Industrial & Automotive Fabrics | 24.43% | | Aerospace & Defence Solutions | 22.97% | | Outdoor & Lifestyle Fabrics | ~21% | More than **54% of revenue** comes from Aerospace & Defence, a segment characterized by long government approval cycles, sticky customer relationships, and favorable demand trends under India's Atmanirbhar Bharat initiative. ### Geographic Revenue Split (FY26) | Geography | Revenue Share | |------------|--------------:| | Domestic | 60.01% | | Exports | 39.99% | A healthy export mix indicates global competitiveness but also exposes the company to foreign exchange risks. --- # Financial Performance | Metric | FY24 | FY25 | FY26 | |--------|------:|------:|------:| | Revenue from Operations (₹ Cr) | 467.9 | 779.0 | 692.0 | | Net Profit (₹ Cr) | 84.4 | 112.0 | 98.2 | | EBITDA (₹ Cr) | 131.8 | 188.4 | 187.9 | | EBITDA Margin | 28.2% | 24.2% | 27.2% | | Cash Flow from Operations (₹ Cr) | 201.0 | -155.0 | 28.3 | | Basic EPS (₹) | 8.32 | 11.03 | 9.68 | | Net Worth (₹ Cr) | - | 257.75 | 502.95 | | Total Borrowings (₹ Cr) | - | - | 223.58 | ### Key Observations - Revenue declined 10% YoY in FY26 (₹779 Cr to ₹692 Cr) - PAT declined 12% YoY in FY26 - EBITDA margins remain healthy at around 27% --- # Key Performance Indicators (KPIs) | KPI | FY24 | FY25 | FY26 | Trend | |-----|------:|------:|------:|-------| | Return on Equity (RoE) | 86.13% | 56.26% | 25.82% | Declining | | Return on Capital Employed (RoCE) | 55.87% | 42.89% | 24.76% | Declining | | Fixed Asset Turnover | 4.27x | 5.05x | 3.40x | Declining | | Working Capital Cycle | -10 days | 14 days | 90 days | Worsening | | Capacity Utilization | 94.33% | 42.32% | 49.50% | Low | The sharp decline in RoE (86% to 26%) and RoCE (56% to 25%) over three years is a significant concern. While EBITDA has remained relatively stable, capital efficiency has deteriorated considerably. Capacity utilization of just 49.5% suggests substantial idle capacity, indicating either weaker demand or over-investment in infrastructure. --- # Manufacturing & Capabilities - 6 manufacturing plants in Gujarat - 1 fabrication unit in Uttar Pradesh - Fully vertically integrated operations from yarn texturizing to weaving, dyeing, coating, lamination, and cut-and-sew - Expertise in Nylon 6, Nylon 66, fine denier yarns, and complex fabric engineering - Installed capacity expanded from **66.58 million metres (FY24)** to **147.52 million metres (FY25)** after the new Kothwa facility became operational - Capacity utilization declined to **56.36% in FY25** from **87% in FY24**, leaving significant headroom for future growth --- # Promoters & Shareholding Structure | Shareholder | Role | Holding | Change (FY25 to FY26) | |-------------|------|---------:|----------------------:| | Siddharth Y. Kusumgar | Chairman & MD | 60.98% | -3.75% | | Sapna S. Kusumgar | Joint MD | 29.13% | -1.81% | | Siddharth Y. Kusumgar HUF | Promoter Entity | 3.43% | -0.84% | | Yogesh K. Kusumgar | Promoter | 0.05% | 0.00% | | **Total Promoter Holding** | | **93.59%** | **-5.56%** | ### Management Team - Siddharth Yogesh Kusumgar - Chairman & Managing Director - Sapna Siddharth Kusumgar - Joint Managing Director - Ankur Kothari - Executive Director & CEO - Kaushal Jaysingh Sampat - Independent Director - Deepti Gupta - Independent Director - Nihar Ajay Parikh - Independent Director Promoters collectively reduced their shareholding by **5.56% in FY26**. Since the IPO is entirely an OFS, the company will receive **no proceeds** from the ₹650 crore issue. --- # Kusumgar vs Listed Peers (FY26) | Parameter | Kusumgar (IPO ₹419) | Garware Tech Fibres | Arvind Ltd | SRF Ltd | |-----------|--------------------:|--------------------:|-----------:|---------:| | Business Type | Pure-play engineered fabrics + defence solutions | Technical fibres & nets | Diversified textiles + brands | Diversified chemicals + packaging + textiles | | Defence Exposure | High (54%+ revenue) | Low | Negligible | Low | | Revenue (₹ Cr) | 692 | 1,528 | 9,303 | 15,787 | | Scale vs Kusumgar | Baseline | 2.2x | 13.4x | 22.8x | | EBITDA Margin | 27.2% | 17.1% | 10.5% | 22.1% | | Net Profit (₹ Cr) | 98.2 | ~228 | ~570 | ~2,712 | | EPS (₹) | 9.68 | 20.01 | 15.80 | 61.91 | | Market Cap (₹ Cr) | ~4,990 | 7,257 | 14,917 | 82,836 | | Industry Average P/E | - | - | - | 39.8x | --- # Analyst's Watchlist ## 1. Pure OFS The entire ₹650 crore issue goes to existing shareholders. The company receives no fresh capital, raising questions about promoter monetization. ## 2. Declining Return Ratios RoE declined from **86% to 26%**, while RoCE fell from **56% to 25%** over three years, indicating a meaningful deterioration in capital efficiency. ## 3. Declining Revenue and Profit Revenue declined 10% YoY and PAT fell 12% YoY in FY26, meaning the company is going public during a period of weakening financial performance. ## 4. Customer Concentration Risk - Largest customer contributes 11.13% of revenue - Top 10 customers contribute 59.52% of revenue Losing one or two major customers could materially affect earnings. ## 5. Working Capital Deterioration The working capital cycle deteriorated from **-10 days (FY24)** to **90 days (FY26)**, indicating substantially more cash is tied up in operations. ## 6 Low Capacity Utilization Capacity utilization stood at only **49.5% in FY26**, indicating significant idle manufacturing capacity. ## 7. Promoter Personal Guarantees Promoters have provided personal guarantees for borrowings totaling **₹117.37 crore**, creating personal financial exposure. ## 8. No Formal Succession Planning Despite significant promoter dependence, the company does not have a formal succession policy. ## 9. Educational Qualification Documentation Some promoters and directors were unable to locate educational qualification documents. The lead manager relied on declarations and affidavits, an unusual disclosure. ## 10. Related Party Transactions The company has entered into related-party transactions with promoters and directors, requiring closer evaluation of terms and materiality. ## 11. Outstanding Legal Proceedings The company and certain promoters are involved in ongoing legal and regulatory proceedings. --- # Bull Case vs Bear Case | Bull Case | Bear Case | |-----------|-----------| | Defence indigenization tailwinds and sticky government contracts | Geopolitical risks and policy changes in defence procurement | | 35-year operating history with over 1,000 SKUs and high entry barriers | Revenue and profit declined in FY26 | | Stable EBITDA margins and stronger net worth | Negative FCF, declining RoE/RoCE, worsening working capital | | Strong GMP indicates positive market sentiment | Pure OFS with no fresh capital for the business | | Experienced promoter-management team | No succession policy, documentation issues, related-party transactions | --- # Analyst's Final Take Kusumgar is a differentiated business operating in a niche, high-barrier segment with strategic importance to India's defence ecosystem. Its long operating history, broad product portfolio, and significant exposure to defence and aerospace provide a compelling long-term structural growth story. However, FY26 financial performance raises concerns. Revenue and profit declined, Free Cash Flow remains negative, return ratios have deteriorated sharply, and capacity utilization is relatively low. Most importantly, this is a pure OFS. Promoters are monetizing ₹650 crore while the company itself receives no capital. Combined with weakening financial performance, investors should carefully evaluate the timing of the issue. The reported 33% Grey Market Premium reflects strong market sentiment driven by the defence manufacturing narrative. However, sentiment and underlying fundamentals do not always move together. --- ## Disclaimer *This AI-generated analysis, based on RHP/DRHP information, is for informational purposes only. Investors should conduct due diligence and consult financial advisors before making investment decisions. Past performance does not guarantee future results, and all investments carry inherent risks including potential loss of principal.*