Knack Packaging will launch its ₹440 crore IPO on July 1, with a price band set at ₹161-170 per share. The company plans to use the majority of the funds to build a new manufacturing facility in Gujarat. Investors should evaluate the company’s growth against potential risks like raw material price volatility and changing environmental regulations in the packaging sector.
What Happened
Knack Packaging, a manufacturer of woven polypropylene bags, is set to open its initial public offering (IPO) for subscription on July 1, 2026. The issue will remain open until July 3. The company has fixed a price band of ₹161 to ₹170 per share. This is the first mainboard IPO to hit the market in July, aiming to raise a total of ₹440 crore.
The fundraising consists of two parts: a fresh issue of shares worth ₹380 crore, which will go to the company, and an offer for sale (OFS) where promoters will sell shares worth approximately ₹60 crore. At the upper end of the price band, the company is valued at ₹2,080 crore.
Why The Company Needs Funds
The primary reason for this IPO is expansion. The company plans to spend ₹320 crore—the bulk of the fresh issue proceeds—to build a new manufacturing plant in Borisana, Gujarat. This facility will produce printed and laminated woven polypropylene (PLWPP) bags and specialized pinch-bottom bags.
Investors should note that the total cost for this project is estimated at ₹364.9 crore. The company has already spent ₹12.8 crore and plans to use ₹32 crore from its own cash reserves, with the rest coming from the IPO funds. The success of this investment depends on the company's ability to complete the project on time and find enough demand to fill the new capacity.
Financial Performance
Knack Packaging has shown steady growth recently. In the financial year 2026, the company reported a profit of ₹92.7 crore, up 25.6% from the previous year. Revenue also grew by 11.8% to reach ₹823.4 crore. A key detail for investors is that profits grew faster than revenue, which suggests the company may have improved its efficiency or product mix during the year.
The Business Reality Check
While the company has notable clients like Baba Agro Food, Drools Pet Food, and DCM Shriram, the business faces specific sector risks that investors should understand:
Raw Material Risk: Woven polypropylene bags are made from polypropylene, a derivative of crude oil. If crude oil prices rise, the cost of raw materials can go up significantly. This can put pressure on profit margins if the company cannot pass these costs to its customers.
Regulatory Risk: The packaging industry is under constant watch regarding environmental norms. Regulations related to plastic waste and extended producer responsibility (EPR) are becoming stricter in India. Any change in government policy regarding plastic or woven packaging could affect the company’s operations.
What Investors Should Track
Before making a decision, investors may want to monitor a few key areas:
Project Execution: The company’s ability to set up the Borisana facility without major delays or cost increases will be the biggest factor for future growth.
Client Concentration: Check if the company relies too heavily on a few large clients. Diversifying the customer base is usually a healthy sign for manufacturing businesses.
Margin Trend: Since raw material prices can be volatile, watch the company’s profit margins in the coming quarters to see if they can maintain current profitability levels.
Allotment and Listing: The anchor book for institutional investors opens on June 30. The final share allotment is expected by July 6, with the shares likely to be listed on the stock exchanges on July 8.