Kusumgar Limited
Issue Structure & OFS vs Fresh Capital Split
| Offering Parameter / Tranche | Allocation & Value | % of Gross Issue | Strategic Mandate / Terms |
|---|---|---|---|
| Fresh Issue (Primary Growth Capital) | ₹ 0.00 cr (not applicable). | 0.0% | Balance sheet equity expansion directly fueling capex, debt repayment & operations |
| Offer for Sale (OFS - Insiders) | ₹ 650.00 cr (up to ₹ 6,500 million). | 100.0% | Secondary liquidity realization for existing promoters & early institutional funds |
| Gross Total Issue Size | ₹650.00 Cr | 100.0% | Aggregate primary market capital raising at upper price band |
| Net Proceeds Reaching Company | ₹ 0.00 cr. The company receives no proceeds from the Offer. | - | Net growth funds after deducting book building issue & underwriting expenses |
| Anchor Investor Allocation Tranche | ₹195.00 Cr (30.0% of Issue) | Up to 30.0% | Reserved anchor allotment tranche for institutional Qualified Institutional Buyers (QIBs) |
| Pre-IPO WACA Benchmark | Promoter cost of acquisition is Nil (₹ 0.00) for Siddharth Kusumgar, Sapna Kusumgar, and Siddharth Kusumgar HUF. | Weighted average cost of acquisition for promoters & early funds | |
| Selling Shareholders & Dilution | Promoters: Siddharth Yogesh Kusumgar (₹ 420.00 cr), Sapna Siddharth Kusumgar (₹ 200.00 cr), and Siddharth Yogesh Kusumgar HUF (₹ 30.00 cr). | ||
| Intermediary / Regulatory Entity | Entity Name / Details | Statutory Function & Status |
|---|---|---|
| Book Running Lead Managers (BRLMs) | SEBI Registered Merchant Bankers / BRLMs | Issue pricing, underwriting, book building & institutional roadshows |
| Registrar to the Issue | SEBI Category-I Registrar | Allotment finalization, Demat share transfer & ASBA refund processing |
| Proposed Listing Exchanges | NSE / BSE | Trading segments, ticker assignment & continuous disclosure compliance |
| Regulatory Prospectus Stage | DRHP / RHP Filed | SEBI ICDR compliance review & exchange in-principle listing approval |
Revenue Breakdown, Product Mix & Customer Concentration
| Product / Operating Segment | Share (%) | Value / Channel |
|---|---|---|
Aerospace & Defence Technical Fabrics | ₹370.09 Cr | |
Aerospace & Defence Solutions | ₹221.90 Cr | |
Industrial & Automotive Fabrics | ₹112.63 Cr | |
Outdoor & Lifestyle Fabrics | ₹56.90 Cr | |
Other Sales | ₹8.57 Cr |
| Market Segment / Customer Concentration Tier | Share (%) | Reported Value | Concentration & Risk Profile |
|---|---|---|---|
| Aerospace & Defence Technical Fabrics | 48.1% | ₹370.09 Cr | DRDO, MoD, parachute & armor fabrics |
| Aerospace & Defence Solutions | 28.8% | ₹221.90 Cr | Ballistic & structural solutions |
| Industrial & Automotive Technical Fabrics | 14.6% | ₹112.63 Cr | Filtration, conveyor, airbags |
| Outdoor & Lifestyle Fabrics | 7.4% | ₹56.90 Cr | Specialized technical apparel |
| Domestic vs Export Revenue Mix | 76.8% / 23.2% | ₹598 Cr / ₹181 Cr | Domestic: 76.8% | Exports: 23.2% |
| Top 1 Customer | 28.9% | ₹225.13 Cr | Institutional defence contractor |
Capital Allocation (Where the Fresh Money Goes)
| Object of the Offer / Proposed Expenditure | Amount (₹ Cr) | % of Fresh Issue | Deployment Timeline / Purpose |
|---|---|---|---|
| Offer for Sale (100% Secondary Sale) | ₹650.00 Cr | 100.0% | Proceeds to selling promoters |
| Fresh Capital to Company | ₹0.00 Cr | 0.0% | Internally funded capex |
3-Year Audited Financial Health & Margins
| Audited Metric / Line Item | FY23 | FY24 | FY25 | 3-Yr CAGR |
|---|---|---|---|---|
| Revenue from Operations | ₹301.65 Cr | ₹467.91 Cr | ₹779.00 Cr | +58.2% |
| EBITDA (Operating Profit) | ₹67.86 Cr (22.5%) | ₹131.85 Cr (28.2%) | ₹188.39 Cr (24.2%) | +66.6% |
| Profit After Tax (PAT) | ₹37.22 Cr (12.3%) | ₹84.40 Cr (17.8%) | ₹111.99 Cr (14.4%) | +73.5% |
| Operating Cash Flow (CFO) | ₹17.58 Cr | ₹200.96 Cr | -₹154.98 Cr | WC Drain |
| ROCE (Return on Capital) | 64.80% | 55.90% | 42.90% | 42%+ ROCE |
| Debt-to-Equity (D/E) | 0.85x | 0.55x | 0.96x | < 1.0x |
Governance, Lock-in & Litigation Review
| Shareholder Category / Promoter Group | Pre-IPO Holding (%) | Post-IPO Holding (%) | Mandatory Lock-in Terms & Dilution |
|---|---|---|---|
| Promoters (Yogesh Kusumgar & Family) | 90.47% | 65.40% | 20% locked for 18 Mos; balance 6 Mos |
| Public & Institutional Float | 9.53% | 34.60% | OFS secondary float |
| Litigation Category / Proceedings | Adjudicating Forum | Quantifiable Exposure | Materiality Assessment |
|---|---|---|---|
| Direct & Indirect Tax Proceedings | High Court / ITAT | ₹0.10 Cr | Legacy tax dispute |
| Intellectual Property Filings | Patent Office | ₹0.00 Cr | Proprietary weaves registered |
1. Executive Business Summary & Core Operations
Kusumgar Limited presents a strong niche business in technical textiles with superior return ratios, but the IPO is a 100% promoter exit. The massive growth is cash-backed but highly lumpy due to customer advances. Our read is to watch the pricing closely.
2. Value Proposition, Products & Operations
Kusumgar manufactures woven, coated, and laminated synthetic fabrics and finished solutions (like parachute systems, camouflage nets, rapid deployment decoys) primarily for aerospace, defence, automotive, and lifestyle applications. The company has over 1,000 unique SKUs and has been a defense partner since 1976.
3. Industry Dynamics & Market Positioning
The IPO is a ₹ 650.00 cr issue, which is a 100% Offer for Sale by the promoters (Siddharth Kusumgar selling ₹ 420 cr, Sapna Kusumgar selling ₹ 200 cr, and Siddharth HUF selling ₹ 30 cr). The company receives no proceeds, which is a watch.
4. Detailed Financial Trajectory & Margin Analysis
The numbers are real but highly volatile. Operating cash flow was negative at -₹ 154.98 cr in FY25 (CFO/PAT of -1.38x) due to the recognition of ₹ 126.46 cr of customer advances received in FY24, which had inflated FY24 cash flows to ₹ 200.96 cr. Revenue growth of 66.5% in FY25 is highly lumpy.
5. Promoter Integrity, Governance & Shareholding
Governance is clean with no criminal proceedings or regulatory actions. CMD Siddharth Kusumgar and Joint MD Sapna Kusumgar are spouse and CMD/JMD, holding 87.1% of capital pre-offer. KMP remuneration is reasonable at 4.8% of PAT, and related party transactions are low (<0.5% of revenue).
6. Relative Valuation & Benchmark Multiples
| Company Name | CMP / Issue Price (₹) | P/E Ratio (x) | EV / EBITDA (x) | RoNW / ROCE (%) | Annual Revenue (₹ Cr) |
|---|---|---|---|---|---|
| Kusumgar Limited | ₹419 | 23.2x | 13.8x | 42.9% | ₹779.00 Cr |
| Garware Technical Fibres Limited | ₹4,150 | 32.9x | 21.4x | 21.4% | ₹1,420.00 Cr |
| Arvind Limited (Advanced Materials) | ₹360 | 21.9x | 11.5x | 14.8% | ₹7,800.00 Cr |
| SRF Limited (Technical Textiles) | ₹2,450 | 48.5x | 24.2x | 17.5% | ₹13,150.00 Cr |
| Industry Peer Composite | - | 34.4x | 19.0x | 17.9% | - |
The IPO P/E is not yet set in the DRHP. Peers trade at P/E multiples of: Garware (32.9x), Arvind (21.9x), SRF (68.4x), with a peer average of 41.1x. Kusumgar's superior ROE (56.3% vs peer average ~13%) justifies a premium, but we must watch the final pricing.