Kusumgar IPO

Kusumgar has the highest EBITDA margin (operating profit margin) among its listed Indian peers, at 27.15% in FY26. This shows the company runs its business efficiently, has good pricing power, and keeps its manufacturing costs under control.

It is not easy for new competitors to enter this business. Developing specialized products, especially for customers like the military, is a long process that can take two to ten years. Once a product is approved, customers rarely change suppliers, which helps the company build long-lasting relationships.

The company is steadily expanding outside India and reducing its dependence on the domestic market. Exports contributed 39.99% of total contract revenue in FY26, up sharply from 23.22% in FY25, generating ₹269.84 crore in revenue.

Kusumgar uses its money and shareholders' investment very efficiently. Its Return on Equity (RoE), which measures how well a company generates profit from shareholders' money, stood at 25.82% in FY26. That's much higher than listed peers such as Arvind Limited, which reported 10.70%.

Kusumgar has developed more than 1,000 unique fabric configurations (SKUs), meaning it can make a large variety of specialized products for different industries. This broad product portfolio helps reduce the impact if demand slows in any one market.

The company has built lasting relationships with well-known international brands, giving it a steady flow of business. For example, it is an approved partner of sportswear giant Decathlon, supplying its designated fabricators for the past seven years, contributing ₹69.98 crore in revenue during FY26.

A large share of Kusumgar's revenue comes from a small number of clients. That means losing even one major customer could have a noticeable impact on its business. In FY26, its largest customer contributed 11.13% of contract revenue (₹75.13 crore), while the top 10 customers together accounted for 59.52% (₹401.68 crore).

Kusumgar's business requires a lot of cash to run. Its working capital cycle, which measures how long money stays tied up in the business before it comes back as cash, worsened from 14 days in FY25 to 90 days in FY26. One key reason is that unpaid customer bills (trade receivables) increased sharply to ₹233.28 crore in FY26 from just ₹42.24 crore in FY24.

The company's six manufacturing facilities are all located in Gujarat. This creates a concentration risk. If the state faces floods, storms, political unrest, or any other major disruption, production across all its factories could be affected at the same time.

More than half of the company's raw materials come from a small group of suppliers, and it does not have long-term supply agreements with them. In FY26, the top 10 suppliers accounted for 51.42% of its total material purchases, worth ₹158.47 crore.

Almost all of Kusumgar's borrowings carry floating interest rates, which means the interest cost rises if market rates go up. In FY26, 99.04% of its total debt of ₹223.58 crore was linked to floating rates, making higher interest rates a key financial risk.

The company has found it difficult to consistently generate cash from its core business. It reported a negative operating cash flow of ₹154.98 crore in FY25, meaning more cash went out than came in from day-to-day operations. However, it turned positive to ₹28.26 crore in FY26. If it again turns negative, it may have to rely more on borrowing or other external funding.