Knack Packaging Limited (Neutral)

Highlights

Knack Packaging Limited, incorporated in 2013, is engaged in the business of manufacturing and exporting integrated B2B industrial packaging solutions, which has strong market recognition in the flexible bulk packaging industry. The company is currently one of India’s leading industrial packaging providers-holding a 10.1 pct market share in the domestic flexible bulk PLWPP bags segment-and is focused on delivering high-strength, customized packaging tailored to global and domestic industrial requirements.

Knack Packaging offers a wide range of packaging products, including PLWPP bags, pinch bottom bags, gusseted bags, block bottom bags, valve bags and retail shopping bags, complemented by structured supply chain management, cost-efficient raw material sourcing, and real-time tracking through its proprietary Knack Galaxy platform.

Their business is primarily classified as: (i) the manufacturing and supply of printed and laminated woven polypropylene (PLWPP) bags and pinch bottom bags; and (ii) customized packaging design and high-quality cylinder printing solutions.

The company operates across domestic and international markets spanning 70 countries through its large-scale manufacturing facilities in Gujarat, offering comprehensive packaging solutions to diverse industries including food products, pet food, agriculture, chemicals, fertilizers, and building materials. They also offer specialized, end-to-end packaging development with a vast portfolio of over 12,000 SKUs with comprehensive services that include in-house bag design, artwork adaptation, and brand consistency management.

From the Total Proceeds of Rs. 4,390 mn, the company proposes to utilize ~Rs. 3,200 mn towards funding CAPEX for of a new manufacturing facility at Borisana (Gujarat), Rs. 600 mn would go for general corporate purposes. Additionally, Rs. 595 mn would go towards existing selling shareholders of the company.

Key Highlights

• The PLWPP bags (5-50kg) market, which forms 7.1 pct of the global woven polypropylene bags and sacks, was valued at USD 1.52 bn in CY25. The market is expected to reach USD 1.85 bn by CY29, expanding at a CAGR of 5 pct. This growth is expected to be driven by the demand in grains and pulses – rice, dal, lentils, etc., flour & spices, sugar, salts, fruits & nuts, animal & pet foods, agriculture etc.
• Knack Packaging is well positioned to benefit from India’s manufacturing and export promotion initiatives, including Make in India, Atmanirbhar Bharat, the Foreign Trade Policy, and export incentive schemes such as RoDTEP, which enhance its global competitiveness and support export growth.
• KPL has also recently established a joint venture in Mexico (Sayem Knack, 50:50) and a subsidiary in South Africa, signalling a deliberate strategic thrust into international manufacturing. KPL is explicitly export-led: international sales constituted ~56 pct of total sales in FY26. The United States is the single largest export destination at 23.7 pct of sales in FY26.
• Knack’s key growth strategies include (i) Expansion of production capacity and strengthen the manufacturing capabilities. (ii) Focus on new product categories (iii) Capitalizing on growing Demand for PLWPP Bags. (iv) Transitioning towards sustainable business practices. (v) Increase exports and focus on new high growth end-user industries.
• From FY24 to FY26, the company’s sales grew 12.2 pct to Rs. 8,234 mn. While EBITDA and profit registered growth of 30.4 pct CAGR and 42 pct CAGR over same period. In FY26, the company sales rose 11.8 pct YoY, EBITDA grew 19.4 pct YoY to Rs. 1,723 mn leading EBITDA margin expansion of 111 bps to 10.9 pct. Profit came at Rs. 927 mn, which rose 25.6 pct YoY

Key Risk

• A significant portion of the company’s sales is derived from existing customers, with top-5 customers contributing ~33 pct of sales in FY26, and without long-term contractual arrangements. Any reduction in orders.
• The company’s key raw materials include polypropylene granules, BOPP films, and LDPE granules, which are largely derived from crude oil. Any sharp volatility in crude oil prices may lead to fluctuations in input costs and impact margins.

Financial Performance

Source: – RHP.

Peer Comparison

Valuation

Knack Packaging Limited (KPL) is one of the leading, integrated, innovation-oriented, export led and sustainable oriented packaging solutions provider, offering a diverse range of packaging solutions, including Printed and Laminated Woven Polypropylene (PLWPP) bags and PLWPP Pinch Bottom bags that are customized, high-strength packaging solutions for a wide range of sectors, including food products and pet foods. At the upper end of the price of Rs. 170, the issue quotes at PE of 22x on post issue capital. The issue looks fully priced.

Disclaimer: The views shared in blogs are based on personal opinions and do not reflect the company’s views. Investment involves risk, and it is advisable to consult a financial advisor before making any investment through the app. The decision to invest is solely that of the investor, and the company or its communication cannot be held responsible for it.