Knack Packaging Limited has filed its Draft Red Herring Prospectus (DRHP) to raise ₹4,350 crore through a fresh issue, aiming to fund capital expenditure for a new manufacturing facility. The Gujarat-based integrated packaging solutions provider reported a 271.46% growth in net profit over two years, reaching ₹73.81 crore in FY2025, driven by operational efficiency and an expanding global footprint. The company commands approximately 10.1% market share in the Indian flexible bulk PLWPP bags segment and serves over 1,900 customers across 68 countries.

Financial Performance and Growth Metrics

The company has demonstrated consistent top-line and bottom-line growth over the past three fiscal years. Revenue from operations increased from ₹518.44 crore in FY2023 to ₹736.49 crore in FY2025, representing a growth of 42.07% over the period. Profitability metrics improved significantly, with the Profit After Tax (PAT) margin expanding from 3.83% in FY2023 to 9.88% in FY2025.

The balance sheet reflects a strengthening equity base, which grew from ₹95.34 crore in FY2023 to ₹214.71 crore in FY2025. Total assets also saw a corresponding rise, reaching ₹449.36 crore in FY2025. The company’s Return on Equity (ROE) improved to approximately 42.66% in FY2025, up from 20.84% in FY2023.

Objects of the Issue and Capacity Expansion

The net proceeds from the IPO will be allocated towards setting up a new manufacturing facility at Borisana, Kadi, Mehsana, Gujarat. The company plans to invest ₹4,350 crore in capital expenditure to install a new packaging line with pinching machines. This expansion is intended to increase overall throughput, improve operational efficiency, and enhance product quality to meet rising domestic and export market demand.

A portion of the net proceeds, not exceeding 25% of the gross proceeds, will be utilized for general corporate purposes. These funds may support business development initiatives, working capital requirements, debt repayment, and operational expenses.

Business Operations and Market Position

Knack Packaging Limited operates a vertically integrated manufacturing process with an effective installed capacity of 36,400 MT per annum as of March 31, 2025. The company specializes in Printed and Laminated Woven Polypropylene (PLWPP) bags and PLWPP Pinch Bottom bags, holding a pioneer status in India and Asia for introducing laser cut and easy-open features.

Export sales constituted 56.24% of the total revenue in FY2025, highlighting the company's significant global presence. The United States market alone contributed 26.61% to the total revenue. Key industry verticals served include food products, pet foods, agriculture, and chemicals.

Key Risks and Factors

While the company exhibits strong growth fundamentals, it faces several risk factors that investors must consider. There is a high dependence on key suppliers, with the top 10 suppliers accounting for 73.51% of total raw material purchases in FY2025 without long-term contracts. Additionally, all manufacturing facilities are located in Gujarat, exposing the company to region-specific risks.

The company also has significant exposure to foreign currency fluctuations, as exports accounted for 56.06% of revenue in FY2025. Furthermore, 26.61% of total revenue is derived from the U.S. market, making it susceptible to geopolitical and trade policy changes. Evolving industry trends towards sustainable and eco-friendly packaging also pose a potential long-term structural risk to the demand for PLWPP products.