Kusumgar IPO could offer long-term growth opportunities for investors with a high-risk appetite, supported by strong profitability, specialised engineered fabric capabilities, and growing demand from defence, aerospace, automotive, and industrial sectors. However, customer concentration, export exposure, and premium valuation remain key risks for investors evaluating the issue.
Specialised Engineered Fabrics Business Drives Growth Potential
Kusumgar Corporates, established in 1990, manufactures woven, coated, and laminated synthetic fabrics, commonly known as engineered fabrics. The company operates through six manufacturing facilities in Gujarat and supplies customised textile solutions for sectors including aerospace, defence, automotive, industrial applications, and outdoor lifestyle products.
Its product portfolio includes specialised fabrics used in parachutes, tactical equipment, camouflage systems, mechanical rubber goods, inflatable products, activewear, rainwear, backpacks, and luggage.
The company plans to raise ₹650 crore through an offer for sale (OFS), following which the promoter group’s stake will reduce to approximately 75.4% from 90.1% after listing.
Strong Profitability Supports Investment Appeal
Kusumgar has demonstrated strong operating performance compared with many listed peers. The company reported an EBITDA margin of 27.2% in FY26, significantly higher than the 10.7%-22.9% range reported by comparable companies.
Revenue increased at a compound annual growth rate (CAGR) of 21.6%, reaching ₹692 crore between FY24 and FY26, while net profit grew at a CAGR of 7.9% to ₹98.2 crore during the same period.
Although revenue and net profit declined by 11.2% and 12.3% respectively in FY26 due to delayed defence orders and weaker US demand, profitability remained resilient. EBITDA margin improved from 24.2% in FY25 to 27.2% in FY26, supported by a favourable product mix.
Defence and Export Exposure Create Growth Opportunities and Risks
Kusumgar’s specialised capabilities provide exposure to high-growth sectors such as defence, aerospace, and technical textiles. Increasing demand for advanced materials and domestic manufacturing initiatives could support future growth.
However, the company faces certain risks due to customer concentration. Around 45% of revenue comes from its top five customers, while the top ten customers contribute nearly 60% of total revenue. Any loss of major customers or changes in order cycles could impact financial performance.
The company also derives nearly 40% of revenue from exports, making it vulnerable to international trade policies, tariffs, and currency fluctuations. The US market contributes around 9-10% of total sales and has already been affected by higher tariffs and demand challenges.
Improving Cash Flow and Strong Returns
Kusumgar’s operating cash flow improved significantly to ₹28 crore in FY26 compared with a deficit of ₹155 crore in FY25. However, it remained below the ₹201 crore generated in FY24.
The company’s return on equity (ROE) moderated to 25.8% in FY26 from 86.1% in FY24 but continues to remain stronger than the 10-14% range reported by many industry peers.
Premium Valuation Reflects Strong Positioning
Based on post-IPO equity, Kusumgar’s valuation stands at a price-to-earnings (P/E) multiple of around 45 times. This compares with a P/E range of 33-46 times for listed peers such as Arvind Limited, Garware Technical Fibres, and SRF Limited.
The premium valuation reflects Kusumgar’s higher margins, specialised product portfolio, and niche market positioning. However, investors need to consider whether future growth can justify the elevated valuation.
Outlook: Suitable for Investors With High Risk Appetite
Kusumgar’s IPO presents a combination of strong profitability, specialised engineered fabric capabilities, and exposure to growing technical textile applications. The company’s focus on defence, industrial, and advanced material segments provides long-term growth potential.
However, high customer concentration, dependence on exports, global trade uncertainties, and premium valuation make it a relatively high-risk investment.
Investors with a long-term horizon and the ability to tolerate higher volatility may consider the IPO, while conservative investors may prefer to monitor execution and growth consistency after listing.