Knack Packaging Limited's IPO concluded with a 25.75x subscription, driven by strong non-institutional investor demand. The company plans to use the ₹379.7 crore fresh issue proceeds to set up a new manufacturing plant in Borisana, Gujarat.
What Happened
Knack Packaging Limited successfully closed its initial public offering (IPO) on Friday, receiving a total subscription of 25.75 times the shares on offer. The non-institutional investor segment led the demand, subscribing 76.83 times their reserved quota. Qualified institutional buyers subscribed 13.55 times, while retail investors oversubscribed their portion 11.02 times. The IPO was priced in a range of ₹161 to ₹170 per share, with the total issue size reaching ₹439.2 crore, consisting of a fresh share issuance and an offer for sale by existing shareholders.
Business And Financial Context
Knack Packaging specializes in manufacturing printed and laminated woven polypropylene bags. The company maintains a global footprint, exporting its products to 68 countries, with the United States market contributing 24 percent of its total revenue. For the financial year 2026, the company reported a total revenue of ₹823 crore and an adjusted profit after tax of ₹92.8 crore. Its operating performance is marked by an EBITDA margin of 18.5 percent. With return on equity at 36 percent and return on capital employed at 27 percent, the company shows strong internal efficiency in generating returns from its capital.
Growth Through Capital Spending
The company intends to allocate ₹320 crore from the fresh issue proceeds toward building a new manufacturing facility in Borisana, Gujarat. This expansion is designed to enhance production capacity. For investors, the success of this project will depend on timely execution and the company's ability to maintain its margin levels once the new capacity comes online. The risk involved in such expansions includes potential cost overruns and the need to secure enough demand to utilize the added production capacity effectively.
Valuation And Market Outlook
At the upper end of the price band, the IPO is valued at approximately 22.4 times its FY26 earnings. This valuation level is often compared by market analysts to peers in the packaging and manufacturing sector to determine if the pricing is reasonable relative to growth expectations. While brokerages like Geojit Investments have noted the company’s diversified customer base and high export revenue as positives, investors should consider that profitability in this sector is sensitive to raw material price fluctuations, specifically polypropylene costs, and changes in export demand.
What Investors Should Track
Following the IPO conclusion, the key monitorables for shareholders include the listing date on the stock exchanges and the subsequent timeline for the construction of the Borisana facility. Investors will also look for management commentary on how the new capacity will impact revenue growth and profit margins in the coming quarters, as well as any updates regarding the company’s ability to manage export demand amidst global economic shifts.