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Salient features of the IPO:

• Knack Packaging Ltd. (KPL), Incorporated on March 4, 2013, the company is among India’s leading integrated, innovation-driven, export-oriented, and sustainability-focused packaging solutions providers. It offers a diverse portfolio of packaging products, including Printed and Laminated Woven Polypropylene (PLWPP) bags and PLWPP Pinch Bottom bags, which are high-strength, customized packaging solutions catering to industries such as food products and pet food. The company’s packaging solutions help enhance brand visibility, mitigate counterfeiting risks, and improve operational efficiency for customers. With an estimated market share of approximately 10.1% in the Indian flexible bulk PLWPP bags market, including PLWPP Pinch Bottom bags, in FY25, the company has established a strong position within the industry.

• The IPO comprises a combination of fresh issue (Rs. 380.00) and OFS (Rs. 56.35 - 59.50cr). Company will not be utilizing any proceeds from the OFS portion. From the fresh issue net proceeds, the company will be utilizing Rs. 320cr for partial funding of capital expenditure towards setting up of new manufacturing facility at Borisana situated at Kadi, Mehsana, Gujarat. Residual amount will be used for general corporate purposes.

Key competitive strengths:

• Focus on operational efficiency through integrated and digitised processes

• Capability to deliver complex product design with accuracy

• Customer-centric custom packaging solutions

• Presence across Indian and global market catering to various industries

• Experienced and skilled management and Board of Directors

Business strategy:

• Expand the production capacity and strengthen the manufacturing capabilities

• Drive growth through focus on new product categories

• Capitalizing on Growing Demand for PLWPP Bags

• Transitioning towards sustainable business practices

• Increase the exports and focus on new high growth end-user industries

• Focus on automation advancing artificial intelligence and machine learning capabilities

Risk and concerns:

• General slowdown in the global economic activities

• A significant portion of revenue is derived from USA (23.7% of revenue for FY26)

• Customer Concentration risk

• Foreign currency fluctuations may adverse the business

• Competition

Valuation Overview and IPO Rating

At the upper price band, the issue is valued at a P/E of 22.4x and an EV/Sales multiple of 2.3x, which appears to be fully priced compared to its listed peers. Over the years, the company has demonstrated consistent growth in both revenue and profitability while steadily improving its operating margins through better cost management. As a leading packaging solutions provider with a well-established customer base, the company benefits from strong customer relationships and a favorable market position. To cater to rising order inflows, the company has been expanding its manufacturing capacity. Going forward, it plans to establish its own manufacturing facilities in place of leased units, which is expected to improve operational efficiency, enhance margins, and support long-term growth. Additionally, a significant portion of the company's revenue is generated from exports, and its joint venture in Mexico is expected to strengthen its international presence, expand its customer base, and enhance brand recognition in overseas markets. Although the issue appears to be fully priced, the company's consistent financial performance, ongoing capacity expansion, strong export presence, and long-term growth initiatives provide comfort. Accordingly, we recommend ‘Subscribe for Long Term' rating to the issue.

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SEBI Registration no.: INZ 000160131