Kusumgar IPO subscribed 1.74x so far on Day 1; should you subscribe?

Liked this AI Summary?

The Kusumgar Limited initial public offering, which opened for subscription today, on July 8, has received a strong investor response on the first day of bidding, with the Rs 650-crore issue being fully subscribed by 11:55 AM. The offer will remain open through July 10.

According to data available on the National Stock Exchange (NSE) till 1:10 PM, the IPO received total bids of 2,04,24,215 against 1,14,68,094 shares offered across all categories. This translates to an overall subscription of nearly 1.74 times.

Non-institutional investors (NIIs) led the demand, subscribing to 3.48 times their allotted quota. The retail individual investor (RII) portion was subscribed 2.08 times, while the employee reserved category saw 1.11 times subscription.

According to platforms tracking grey market activity, Kusumgar shares were commanding a premium of up to 40 percent in the unofficial market on the morning of July 8. IPO Watch quoted a GMP of Rs 168 per share, indicating a potential listing gain of 40.10% over the upper end of the price band. Market participants note that GMP is an unofficial indicator and subject to fluctuations.

The company has fixed the price band at Rs 398–Rs 419 per equity share, with a face value of Re 1. The IPO is entirely an Offer for Sale (OFS) of 1.55 crore equity shares. The company will not receive any proceeds from the offering.

Investors can apply for a minimum of 35 equity shares and in multiples thereafter. At the upper price band, the minimum investment for retail investors is Rs 14,665.

The issue follows the book-building process, with 50% of the net offer reserved for Qualified Institutional Buyers, 35% for retail investors, and 15% for non-institutional investors. The company has set aside shares worth Rs 3.5 crore for eligible employees, who will receive a discount of Rs 39 per share on the final issue price.

Ahead of the public issue, Kusumgar raised Rs 193.9 crore from anchor investors on July 7, allocating 46,28,877 equity shares at Rs 419 each. Participants included BlackRock Global Funds, Goldman Sachs Funds, Kotak Mahindra Life Insurance Company and several domestic mutual funds, including SBI, ICICI Prudential and Tata Mutual Fund.

In FY26, revenue from operations stood at Rs 692 crore, up from Rs 467.9 crore in FY24. Net profit rose to Rs 98.2 crore in FY26 from Rs 84.3 crore in FY24. However, on a year-on-year basis, revenue declined 11.2% and net profit fell 12.3% in FY26, attributed to deferred defence orders and US tariff impacts on exports.

Axis Capital, IIFL Capital Services, and Motilal Oswal Investment Advisors are the book-running lead managers. Bigshare Services is the registrar. Shares are proposed to list on BSE and NSE, with a tentative listing date of July 15.

"Investors may consider the IPO as a potential long-term investment opportunity," Master Capital said in its latest IPO note.

The brokerage highlighted the favourable outlook for the engineered fabrics industry, stating, "The global engineered fabrics industry expanded from USD 41.6 billion in 2019 to USD 67.8 billion in 2025, registering a CAGR of 8.5%, and is projected to reach USD 112.2 billion by 2030 at a CAGR of 10.6%. In India, the engineered fabrics market grew from USD 6.3 billion in FY20 to USD 11.2 billion in FY26, recording a 10.0% CAGR, and is projected to reach USD 21.1 billion by FY31 at a 13.5% CAGR. In FY26, Industrial & Automotive dominated the market with a 56.6% share, followed by Outdoor & Lifestyle at 32.6% and Aerospace & Defence at 5.9%. By FY31, the Industrial & Automotive segment is expected to account for 57.8%, Outdoor & Lifestyle 27.9%, and Aerospace & Defence 7.8%, reflecting increasing demand for defence-related applications."

Further, the note stated, "In this favourable industry landscape, Kusumgar Limited is well positioned to benefit from growing demand across its Aerospace & Defence Fabrics, Aerospace & Defence Solutions, Industrial & Automotive Fabrics, and Outdoor & Lifestyle Fabrics segments. Its vertically integrated manufacturing capabilities, strong technical expertise, strategic partnerships, diversified product portfolio, export presence, and focus on innovation position it to capitalize on opportunities arising from global supply chain diversification, defence modernisation and indigenisation and technological advancements."

Established in 1990, Kusumgar manufactures woven, coated and laminated synthetic fabrics for aerospace and defence, industrial and automotive and outdoor and lifestyle segments. The company operates six manufacturing facilities in Gujarat and one fabrication unit in Uttar Pradesh, with a portfolio of over 1,000 unique Stock Keeping Units (SKUs).