Kusumgar IPO (8-10 July) Analysis

IPO Analysis  |  BSE and NSE Main Board  |  100% Offer for Sale  |  Offer Size: Rs.650 Crore

Based on Red Herring Prospectus dated July 1, 2026  |  Woven, Coated and Laminated Engineered Fabrics  |  Vile Parle (West), Mumbai / Gujarat Manufacturing

STATUS: RHP FILED  |  100% OFS: Rs.650 Crore  |  No Fresh Issue  |  Regulation 6(1) Main Board  |  BSE and NSE  |  Price Band: [TBD]  |  6 Manufacturing Facilities, Gujarat

 Kusumgar Limited (KL) is a manufacturer of woven, coated, and laminated synthetic fabrics, referred to as engineered fabrics, with its registered and corporate office at 101, Manjushree, V.M. Road, Corner of N.S. Road No. 5, JVPD Scheme, Vile Parle (West), Mumbai 400056, Maharashtra. Originally incorporated as Kusumgar Finstocks Private Limited on June 15, 1990 under the Companies Act, 1956, and subsequently renamed to Kusumgar Private Limited and then to Kusumgar Limited ahead of this IPO.

Its website is https://www.kusumgar.com. Its CIN is U65990MH1990PLC056871. The four promoters are Yogesh Kantilal Kusumgar, Siddharth Yogesh Kusumgar, Sapna Siddharth Kusumgar, and Siddharth Yogesh Kusumgar HUF.

Business model: KL manufactures over 1,000 unique fabric SKUs (as at March 31, 2026) across four primary market segments. Fabrics are engineered for specific high-performance applications using polyamide and polyester filaments with polyurethane chemistry, where critical parameters include tensile strength, tear strength, abrasion resistance, air permeability, waterproofing, and weight-to-strength ratios.

Six manufacturing facilities are located in Gujarat (Vapi, Karanj, Kothwa, Kosamba, and two others), with aggregate capacity utilisation at processing, dyeing, finishing, printing, and coating factories of 49.50% in Fiscal 2026 (down from 42.32% in FY2025 and 94.33% in FY2024).

Four market segments:

(1) Aerospace and Defence Fabrics (Rs.2,137 million, 31.67% of FY2026 revenue): fabrics for parachutes and aerial systems, tactical clothing and specialty gear, and stealth/rapid deployment systems, developed as a manufacturing and development partner of an Indian government customer and also exported globally.

(2) Aerospace and Defence Solutions (Rs.1,550 million, 22.97% of FY2026 revenue): end-user finished products including parachute systems (aerial systems), camouflage nets (stealth systems), and decoys and shelters (rapid deployment systems), as well as maintenance and repair service agreements.

(3) Industrial and Automotive Fabrics (Rs.1,649 million, 24.43% of FY2026 revenue): fabrics for tapes, custom fabric solutions, mechanical rubber goods (MRG) fabrics, and inflatable fabrics.

(4) Outdoor and Lifestyle Fabrics (Rs.1,253 million, 18.57% of FY2026 revenue): performance fabrics for activewear, athleisure, winter wear, rainwear, and fashion; and hardlines (backpacks, luggage, sleeping bags, tents) with Decathlon-linked fabricators as a key customer.

Critical structural observation: the aerospace and defence segment (Fabrics plus Solutions combined) represented approximately 54.64% of FY2026 revenue from customers, but declined significantly from 68.98% in FY2024. The Aerospace and Defence Fabrics segment alone declined from Rs.3,701 million (FY2025) to Rs.2,137 million (FY2026), a 42.3% decline, which together with an 11.17% fall in total revenue from operations in FY2026 versus FY2025 is the defining financial trend that investors must understand.

Decathlon: the only named customer. Decathlon Sports India Private Limited (a subsidiary of Decathlon S.A., France) is named as one of KL's top 5 customers in each of the three fiscal years. However, KL does not contract directly with Decathlon S.A.; it contracts with fabricators who supply Decathlon, making the commercial relationship indirect and potentially more fragile than a direct customer contract would be.

Key Basics

This is a 100% Offer for Sale with no Fresh Issue component. The company receives no proceeds from the Offer. All Rs.650 Crore (Rs.6,500 million) in proceeds go entirely to three Promoter Selling Shareholders. The Offer is listed on both BSE and NSE main boards under Regulation 6(1) of SEBI ICDR Regulations (the standard profitability-based main board eligibility route). The Price Band is not yet disclosed in this RHP.

Document Type	Red Herring Prospectus (RHP) dated July 1, 2026. Price Band to be announced before Anchor Investor Bidding. Bid/Offer dates TBD.
Offer Structure	100% Offer for Sale. No Fresh Issue. The Company will receive NO proceeds from this Offer. All Rs.6,500 million (Rs.650 Crore) goes to three Promoter Selling Shareholders.
OFS Selling Shareholders	Siddharth Yogesh Kusumgar: up to Rs.4,200 million (64.6% of OFS), WACA Nil. Sapna Siddharth Kusumgar: up to Rs.2,000 million (30.8% of OFS), WACA Nil. Siddharth Yogesh Kusumgar HUF: up to Rs.300 million (4.6% of OFS), WACA Nil. All three have WACA of Nil per share.
Employee Reservation	Up to Rs.35 million reserved for Eligible Employees. Employee Discount of up to 10% on Offer Price available.
Face Value	Rs.1 per Equity Share
Pre- and Post-Offer Shares	Pre-Offer: 1,04,991,372 Equity Shares. Post-Offer: 1,04,991,372 Equity Shares. Share count is unchanged since this is 100% OFS.
Promoters	Yogesh Kantilal Kusumgar, Siddharth Yogesh Kusumgar, Sapna Siddharth Kusumgar, and Siddharth Yogesh Kusumgar HUF.
Eligibility	Regulation 6(1) of SEBI ICDR Regulations, the standard main board profitability-based eligibility route.
Listing Exchanges	BSE Limited and National Stock Exchange of India (NSE). In-principle approvals received November 21, 2025. Designated Stock Exchange: NSE.
BRLMs	Axis Capital Limited (Sagar Jatakiya, kusumgar.ipo@axiscap.in) and IIFL Capital Services Limited (formerly IIFL Securities Limited).
Registrar	MUFG Intime India Private Limited (formerly Link Intime India Private Limited). Email: kusumgar.smeipo@in.mpms.mufg.com
Bid/Offer Dates	To be announced. Anchor Investor Bidding: one Working Day prior to Bid/Offer Opening Date.
Listed Industry Peers	Garware Technical Fibres Limited, Arvind Limited, and SRF Limited (three named peers, explicitly noted as not strictly comparable in size or business model).

 Since this is a 100% Offer for Sale, the Company receives no proceeds whatsoever. This is a pure promoter liquidity event.

Selling Shareholder	OFS Amount (Rs. Crore)	Notes
Siddharth Yogesh Kusumgar (Promoter Selling Shareholder)	420.00	Largest OFS component. WACA: Nil per share. Promoter is selling shares acquired at effectively zero cost and will realise proceeds at the eventual Offer Price, which represents an extremely large return on acquisition cost.
Sapna Siddharth Kusumgar (Promoter Selling Shareholder)	200.00	WACA: Nil per share. Spouse of Siddharth Yogesh Kusumgar. OFS proceeds go entirely to her.
Siddharth Yogesh Kusumgar HUF (Promoter Selling Shareholder)	30.00	WACA: Nil per share. Hindu Undivided Family entity. Proceeds go to the HUF.
TOTAL OFS	650.00 Crore	100% OFS. The Company receives ZERO proceeds. All Rs.6,500 million goes to the three Promoter Selling Shareholders. Post-Offer, the share count remains unchanged at 10,49,91,372 shares.

The 100% OFS structure means this IPO serves exclusively as a promoter exit mechanism at a near-zero acquisition cost, rather than a capital raise for business purposes. The company's balance sheet, cash position, and operational funding are unaffected by the Offer outcome. This structure is entirely transparent and common for profitable businesses offering promoter liquidity, but investors should note they are effectively valuing the existing business rather than funding any new growth initiative.

Financial Performance

Note: All figures in Rs. million unless stated. All financial periods use the Restated Consolidated Financial Information under Ind AS for FY2026 and FY2025, and Restated Combined Financial Information for FY2024 (the company did not have subsidiaries in FY2024; one subsidiary was consolidated under common control accounting for comparison purposes). The single most important financial fact in this RHP is the 11.17% decline in revenue from operations in FY2026 versus FY2025, driven by a 42.3% decline in Aerospace and Defence Fabrics revenue, the company's highest-margin segment.

Revenue, EBITDA, and Profitability

Metric	FY2026 (Rs. Mn)	FY2025 (Rs. Mn)	FY2024 (Rs. Mn)
Revenue from Operations	6,920.03	7,789.97	4,679.08
Revenue Growth % YoY	(11.17%)	+66.49%	N/A
A&D Fabrics Revenue	2,136.99	3,700.92	3,134.88
A&D Fabrics % of Revenue	31.67%	48.06%	68.79%
A&D Solutions Revenue	1,550.17	2,219.02	8.64
Industrial and Automotive Revenue	1,648.60	1,126.34	1,113.86
Outdoor and Lifestyle Revenue	1,253.15	569.00	291.65
Export Revenue as % of Total	39.99%	23.22%	25.62%
Government-owned entity revenue	1,018.16 (15.09%)	2,668.40 (34.65%)	152.07 (3.34%)
Other Income	197.75	112.15	66.43
Total Income	7,117.78	7,902.12	4,745.51
Cost of Materials Consumed	3,081.66	3,713.71	2,002.86
Employee Benefits Expense	881.86	655.73 (est.)	414.85
Finance Costs	259.78	341.90	170.97
Depreciation and Amortisation	466.89	146.31 (est.)	63.22
Total Expenses	5,768.20	6,394.29	3,594.80
Profit Before Tax	1,349.58	1,507.83	1,150.71
Total Tax Expense	367.58	387.95	306.75
Profit After Tax (PAT)	982.00	1,119.88	843.96
PAT Growth % YoY	(12.31%)	+32.69%	N/A
EBITDA (Rs. Mn)	1,878.50	1,883.89	1,318.47
EBITDA Margin %	27.15%	24.18%	28.18%
PAT Margin %	13.80%	14.17%	17.78%
Return on Equity (RoE) %	25.82%	56.26%	86.13%
Return on Capital Employed (RoCE) %	24.76%	42.89%	55.87%
Net Debt (Rs. Mn)	1,755.22	2,053.14	(667.60)
Net Debt to EBITDA (times)	0.93x	1.09x	(0.51x)
Working Capital Cycle (days)	90 days	14 days	(10 days)
Capacity Utilisation (Processing/Dyeing/Finishing/Coating)	49.50%	42.32%	94.33%
Basic and Diluted EPS (Rs.)	9.68 / 9.31 (FY26)	11.03 / 10.81 (FY25)	8.32 / 8.32 (FY24)

Note: FY2025 depreciation and employee costs shown as estimates derived from total expenses minus individually disclosed line items. Restated Combined figures for FY2024 include Engineered Coated Fabric Private Limited under common control retrospective consolidation.

The financial trajectory requires careful disaggregation. FY2025 saw exceptional growth (+66.49%) driven by a surge in Aerospace and Defence revenues, particularly A&D Solutions which barely existed in FY2024 (Rs.8.64 million) before expanding to Rs.2,219.02 million in FY2025. FY2026 then saw a reversal: total revenue fell 11.17%, A&D Fabrics revenue fell 42.3% (from Rs.3,701 million to Rs.2,137 million), government customer revenue fell from Rs.2,668 million (34.65% of revenue) to Rs.1,018 million (15.09%), and PAT fell 12.31%.

The FY2026 decline in government-linked A&D revenue is the dominant factor explaining the overall revenue and profit decline, and appears to be timing-related (government procurement order cycles) rather than a permanent loss of capability or relationship.

The partial offset came from Outdoor and Lifestyle (Rs.1,253 million in FY2026 vs Rs.569 million in FY2025, a 120.2% increase) and Industrial and Automotive (Rs.1,649 million vs Rs.1,126 million, up 46.4%), suggesting a deliberate and partially successful revenue diversification as A&D orders moderated.

EBITDA margin actually improved from 24.18% to 27.15% despite the revenue decline, indicating the company managed its cost base effectively when demand fell. The working capital cycle extension from 14 days to 90 days in FY2026 reflects the inventory build and receivables elongation associated with lower throughput but maintained procurement.

Balance Sheet and Cash Flow

Item	FY2026 (Rs. Mn)	FY2025 (Rs. Mn)	FY2024 (Rs. Mn)
Total Equity	5,029.54	2,577.52	1,403.59
Equity Share Capital	119.00	101.49	19.90
Non-Current Borrowings	851.19	757.64	348.05
Current Borrowings	1,384.63	1,707.37	417.28
Total Assets	9,050.72	6,323.98	5,847.41
Property, Plant and Equipment (Net)	1,337.32	1,307.87	N/A
Right-of-Use Assets	5.32 (approx.)
Inventories	1,675.32	203.99	213.84
Trade Receivables	N/A (est.)	N/A	799.55 (FY24)
Cash and Cash Equivalents	268.29	304.94	326.80
Net Cash from Operating Activities	282.58	(1,549.76)	2,009.64
Net Cash from Investing Activities	(1,026.59)	20.62	(1,995.80)
Net Cash from Financing Activities	697.47	1,507.49	211.84

The balance sheet shows significant equity growth: total equity expanded from Rs.1,403.59 million (FY2024) to Rs.5,029.54 million (FY2026), driven by retained earnings accumulation and a share capital increase (from Rs.19.90 million to Rs.119.00 million, reflecting a restructuring of share capital ahead of the IPO).

Total assets grew from Rs.5,847.41 million to Rs.9,050.72 million. Inventories surged from Rs.203.99 million (FY2025) to Rs.1,675.32 million (FY2026), an 8.2-fold increase in one year, likely reflecting build-up of input materials and semi-finished goods as A&D orders moderated. This inventory build, combined with working capital dynamics, explains the dramatic swing in operating cash flow from negative Rs.1,549.76 million (FY2025) to positive Rs.282.58 million (FY2026), and before that from a strongly positive Rs.2,009.64 million (FY2024).

How Does It Compare to Peers?

The RHP names three listed industry peers: Garware Technical Fibres Limited, Arvind Limited, and SRF Limited. The RHP explicitly notes these companies are not strictly comparable in size or business model, and only Garware Technical Fibres has a directly relevant business focus. All figures in Rs. million.

Metric (FY2026)	Kusumgar	Garware Tech Fibres	Arvind Limited	SRF Limited
Revenue from Ops (Rs. Mn)	6,920.03	15,287.86	N/A (large)	1,57,865.10
EBITDA (Rs. Mn)	1,878.50	N/A	N/A	36,200.00
EBITDA Margin %	27.15%	N/A (Garware FY25: ~20.70%)	N/A	22.93%
PAT (Rs. Mn)	982.00	N/A (Garware FY25: 2,315.48)	N/A	18,351.80
PAT Margin %	13.80%	N/A (Garware FY25: 14.67%)	N/A	11.55%
RoE %	25.82%	N/A	18.60%	10.70%
RoCE %	24.76%	N/A	9.30%	13.76%
Net Debt to EBITDA (x)	0.93x	N/A (Garware FY25: 0.86x)	N/A	1.41x
Export % of Revenue	39.99%	62.01% (FY25)	N/A	40.95% (FY25)

The most relevant peer is Garware Technical Fibres Limited, a BSE/NSE main board listed company focused on high-performance technical textiles and specialty fibre-based products. Garware is approximately 2.2 times Kusumgar's revenue scale. Kusumgar's EBITDA margin of 27.15% compares favourably to Garware's approximately 20.70% (FY2025) and SRF's 22.93%, indicating higher per-unit profitability in Kusumgar's engineered fabric mix, likely attributable to the premium nature of aerospace and defence products.

Kusumgar's RoE of 25.82% and RoCE of 24.76% also compare well against the peer group. Arvind Limited and SRF Limited are significantly larger, more diversified conglomerates with broader product portfolios and are of limited direct comparability to Kusumgar's niche. The Price Band, once disclosed, should be assessed against the comparable valuations of Garware Technical Fibres as the most relevant listed benchmark.

Key Risks

l  100% OFS means the company receives zero capital: every rupee raised in this IPO goes directly to three promoter-family Selling Shareholders, all with WACA of Nil per share. This is not a growth-capital raise for business investment, technology development, debt reduction, or capacity expansion. Investors are purely providing promoter liquidity. The company's financial position, debt levels, and working capital are completely unaffected by whether the IPO is subscribed or not.

l  Aerospace and Defence Fabrics revenue declined 42.3% in FY2026 to Rs.2,137 million from Rs.3,701 million in FY2025: the company's highest-revenue and historically highest-margin segment fell sharply in a single year, causing total revenue to decline 11.17% and PAT to fall 12.31%. The decline in government-entity revenue from Rs.2,668 million (34.65% of FY2025 revenue) to Rs.1,018 million (15.09% of FY2026 revenue) reflects significant order timing variability from an Indian government customer. The A&D business is inherently lumpy and subject to government procurement cycles that cannot be contractually managed. If further deferrals occur post-listing, revenue and profit could decline further.

l  Sustained negative operating cash flow risk: operating cash flow was deeply negative Rs.1,549.76 million in FY2025, before recovering to positive Rs.282.58 million in FY2026. The FY2025 negative OCF reflects a very large working capital absorption (financing activities raised Rs.1,507.49 million to bridge the gap). The inventory surge from Rs.204 million to Rs.1,675 million in FY2026 and the working capital cycle extension from 14 to 90 days are warning signals that require monitoring. The risk factor disclosure explicitly highlights this as an ongoing concern.

l  Working capital cycle elongated from 14 days (FY2025) to 90 days (FY2026) while capacity utilisation remains below 50%: both signals indicate the business operated at reduced throughput in FY2026 while accumulating inventory and absorbing receivables. Capacity utilisation at processing/dyeing/finishing/coating factories of 49.50% is well below the 94.33% achieved in FY2024, indicating significant available but undeployed production capacity, and a fixed-cost base being spread over lower volumes.

l  All six manufacturing facilities concentrated in Gujarat, and all depend on continuous access to specialised imported machinery: concentration in a single state creates regional disruption risk. Additionally, the engineered fabrics industry relies heavily on high-end imported machinery (looms, coaters, calenders), making maintenance, replacement, and upgrades dependent on foreign suppliers and supply chains.

l  Top 10 customers contributed 59.52% of FY2026 revenue (vs 84.69% in FY2025), with no long-term contracts with any customer: the company has meaningfully diversified its top-10 concentration in one year (84.69% to 59.52%), but still relies on a relatively small number of counterparties. The top single customer contributed 11.13% of revenue. Crucially, there are no long-term agreements with any of the top 10 customers, meaning order flow is entirely at customer discretion.

l  Revenue from A&D Solutions is a relatively new business line with limited multi-year track record: A&D Solutions revenue was just Rs.8.64 million in FY2024 before growing to Rs.2,219 million (FY2025) and Rs.1,550 million (FY2026). While the trajectory is strong, the business unit is operationally young, and the large FY2025 A&D Solutions revenue raise the question of whether FY2025 was an exceptional delivery year rather than a normalised run rate.

l  Decathlon relationship is indirect and depends on fabricators: KL contracts with Decathlon-linked fabricators, not directly with Decathlon S.A. If Decathlon changes its supply chain structure, switches primary fabric suppliers, or if the fabricator relationships are disrupted, KL's Outdoor and Lifestyle revenue could be adversely affected without Decathlon having any direct contractual obligation to KL.

l  Export revenue is 39.99% of revenue (FY2026) across a wide set of geographies: while export diversification is strategically positive, it creates exposure to foreign exchange fluctuations, geopolitical developments, and varying regulatory requirements in destination markets. Tariff changes in the US (which has imposed higher tariffs on Indian engineered fabric imports per the RHP) have already increased the effective duty and could affect export competitiveness.

l  Recent US tariff impact on engineered fabrics: the RHP discloses that effective August 27, 2025, new US tariffs resulted in increased total duties on engineered fabric exports from India to the US. The company exports to the US (included in its 19-country export universe), and any escalation in trade barriers could affect both the pricing and volume of these exports.

Positives to Note

l  Diversified four-segment engineered fabric portfolio with high entry barriers across all four: aerospace and defence fabrics and solutions require government vendor pre-qualification, technical product approvals, and long certification cycles that create genuine competitive moats. Industrial and automotive fabrics and outdoor/lifestyle fabrics, while more competitive, both require precision manufacturing capabilities (tensile, tear, waterproofing parameters) that limit the number of qualified domestic suppliers.

l  EBITDA margin of 27.15% (FY2026) is strong and actually improved from 24.18% (FY2025) despite the revenue decline: the company demonstrated genuine cost management by maintaining and even improving margins while revenue fell 11.17%. This indicates a well-controlled cost structure with variable cost discipline, and suggests that when A&D volumes recover, EBITDA margin could expand further given operating leverage.

l  Outdoor and Lifestyle segment grew 120.2% in FY2026 (from Rs.569 million to Rs.1,253 million): this rapid expansion in a consumer-adjacent segment, driven by demand for activewear and outdoor performance fabrics including the Decathlon supply chain, demonstrates the company's ability to scale a new revenue stream significantly in a single year, providing meaningful evidence of growth trajectory beyond the defence cycle.

l  Regulation 6(1) main board eligibility confirms multi-year profitable operating track record: unlike issuers that rely on alternative eligibility routes, Kusumgar qualifies under the standard profitability-based main board Regulation 6(1), reflecting a sustained earnings track record across multiple fiscal years that satisfies SEBI's most stringent historical criteria.

l  Unique positioning in Indian A&D Fabrics with defence indigenisation tailwind: the Indian government's Atmanirbhar Bharat and defence indigenisation programmes are increasing domestic sourcing requirements for defence equipment, potentially benefiting established Indian suppliers like Kusumgar in the medium term, particularly as the Ministry of Defence expands its positive indigenisation lists.

l  Net Debt to EBITDA of 0.93x (FY2026) reflects moderate leverage with room for growth financing: total borrowings of approximately Rs.2,236 million against EBITDA of Rs.1,879 million represents manageable leverage for a capital-intensive manufacturing business, and provides headroom for future debt-funded capacity expansion if business requires it.

Disclaimer

The content on this website is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or a solicitation to buy or sell any security, mutual fund, or financial instrument. Equity Research India is not a SEBI-registered investment advisor or research analyst, and nothing on this site constitutes personalized financial advice.

Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing. Past performance is not indicative of future returns. NAV, returns, rankings, and other data may change and may not reflect the most current information at the time of reading.

Readers should conduct their own due diligence and consult a SEBI-registered financial advisor before making any investment decisions. Equity Research India and its authors accept no liability for any loss or damage arising from the use of this content.