Lohia Corp's ₹1,100 crore initial public offering is open for subscription until July 27. The company is a key player in woven Raffia machinery but faces risks tied to the cyclical nature of technical textiles and potential future regulations on plastic packaging.
Detailed Coverage
Lohia Corp has launched its initial public offering (IPO), seeking to raise ₹1,100 crore through an offer for sale. In this process, existing promoters and public shareholders are selling a portion of their holdings. Following the completion of this issue, the promoter stake in the company is expected to decrease from 95.6% to 75.2%.
Business Model and Market Standing
The company manufactures machinery used in the production of woven Raffia, a material widely used for industrial packaging such as cement sacks, fertilizer bags, and Flexible Intermediate Bulk Containers (FIBCs). Lohia Corp currently holds a 41% market share in the Indian woven Raffia machinery segment and is the second-largest player globally, commanding a 15% share. Its operations cover the full manufacturing cycle, ranging from Raffia tape extrusion to plastic waste recycling. While the company generated 58% of its revenue from the domestic market in the fiscal year 2026, it is aiming for an even split between India and international markets in the coming years.
Financial Performance Overview
Financial data from fiscal years 2024 to 2026 reflects a period of significant growth. The company reported a revenue compound annual growth rate (CAGR) of 21% and a net profit CAGR of 159%. Profitability metrics also showed improvement, with EBITDA margins rising from 9% to 19.5%, while net profit margins increased from 2.5% to 11.7%. The company reported a net debt-to-equity ratio of 0.2x, and it is effectively net debt-free when accounting for its investments in liquid mutual funds. Additionally, the return on capital employed (RoCE) improved from 10.5% in fiscal 2024 to 40.9% in fiscal 2026.
Valuation and Sector Risks
At the upper end of the price band, the company is valued at approximately ₹4,500 crore, which is 22 times its trailing earnings. When comparing this to other capital goods firms, such as LMW, Jyoti CNC, and Rajoo Engineers, which trade at P/E ratios between 20x and 120x, the valuation sits within the broader industry range. However, investors must consider the cyclical nature of the technical textiles sector, where demand often fluctuates with industrial activity. Furthermore, there is a risk that changing environmental regulations regarding plastic-based materials could impact future business.
Another point for investors to monitor is the current capacity utilization, which stands at approximately 50%. Future growth will depend on the company's ability to increase this utilization and manage the transition toward potentially stricter international norms regarding plastic packaging. The performance of the stock after listing will be influenced by how effectively the company sustains its profit margins in a competitive global environment and whether it can continue to expand its international revenue share as projected.