Bag to the Future: The Knack Packaging Limited IPO
This company makes heavy duty bags for the world. Read all about their IPO here!
IPO Summary
The Big Picture
Everything needs a bag. Your food, your pets’ food, the cement that makes up the house you live in, all comes in little, or big bags.
Knack Packaging Limited turns plastic granules into bags that carry your rice, pulses, pet food, fertilizer and cement to 71 countries. The company handles ~10% of India’s flexible bulk PLWPP bag market in FY2025, the highest among its direct peer group.
And, it’s launching an IPO with a fresh issue of ₹380 Cr and an offer for sale of up to ~35 lakh shares. The IPO opens on July 1, 2026 and closes on July 3, 2026.
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The Business Model
Knack primarily manufactures Printed and Laminated Woven Polypropylene (PLWPP) bags and PLWPP Pinch Bottom bags. These are bulk packaging bags, typically holding 5kg to 50kg of product, sold to companies that pack grains, pulses, spices, sugar, pet food, building materials, etc.
Customers tell Knack what they want to pack and at what weight, and Knack designs and manufactures the finished bag along with the branding.
Production runs at four facilities in Gujarat. Polypropylene granules are extruded into tapes, woven into fabric, printed on using gravure printing, laminated to a BOPP film for strength and branding, and finished into bags with features such as pinch-bottom seals, handles or laser-cut openings.
The company sells under a B2B2C model, selling directly to brands. Key clients include Cargill, KRBL, Drools Pet Food, etc.
Effective installed capacity stood at 43,300 MT in FY2026, running at 81.6% utilisation.
PLWPP bags made up 73% of FY2026 product revenue and PLWPP Pinch Bottom bags bagged a further 20%.
Unit Economics
Note: Quantity sold was 30,590 MT in FY2024, 34,472 MT in FY2025 and 38,157 MT in FY2026.
Employee cost per kg fell from ₹15 in FY2024 to ₹12 in FY2026 as volume grew faster than headcount.
Adj. EBITDA per kg is up by 36% from FY2024 to FY2026, from ₹33 to ₹45.
Operating Metrics
Capacity utilisation fell from 88.65% to 81.63% over two years, not because demand slowed but because installed capacity grew 30%, from 33,400 MT to 43,300 MT, as Knack’s latest Unit (Unit 3) began production.
The United States alone contributed ~24% of FY2026 total revenue from operations, making Knack’s growth tied closely to global demand and currency movements.
Rising Inventory Size signifies that Knack expects a higher demand for their products. But on the other hand, higher inventories tie up valuable working capital and increases storage costs.
Financial Stuff: From Adj. EBITDA to Net Profit
PAT rose 60% in FY2025 and 26% in FY2026, as EBITDA margin gains flowed through almost untouched.
Finance cost actually fell in FY2026 to ₹15.91 Cr, from ₹16.96 Cr in FY2025.
Peer Comparison — FY2026
Knack runs the highest EBITDA margin in the group at 20%, despite being smallest by revenue.
On a similar note, Knack’s PAT Margin at 11% is also the highest among the four.
Key Risks
Customer concentration without contracts. Knack’s top 10 customers made up almost half of FY2026 revenue. None of these relationships are backed by long-term contracts.
Raw material and supplier concentration. Knack’s Polypropylene granules purchases are made on a spot-order basis with no long-term contracts. Their prices track crude oil and global polypropylene markets, both volatile and outside Knack’s control.
Export Risk: Since exports made up ~56% of FY2026 revenue, with the US alone contributing ~24%, changes in India-US trade terms or tariffs would be bad news for Knack.
Valuation
Conclusion
Knack Packaging sells a low-glamour product, the bag a company’s grain or pet food arrives in, but it does so with improving unit economics, like an EBITDA per kg that’s up 36% in two years. A business like this, is the backbone of many other businesses, and with ~₹320 Cr of the proceeds being used towards repayment of debt, Knack’s numbers are bound to improve if the current trajectory is maintained.
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