Knack Packaging IPO: Subscribed 8.34x with 17% GMP; Should You Apply?

The Rs 439.5 crore Knack Packaging IPO has witnessed robust demand as it enters its final day of bidding, showing strong interest across various investor categories. With a healthy grey market premium and consistent financial growth, the market is closely watching this integrated packaging solutions manufacturer.

As of the third day of bidding, the Knack Packaging IPO has been subscribed 8.34 times against the total 1.89 crore shares on offer. The subscription data reveals a significant appetite from high-net-worth individuals, while retail and institutional segments show steady participation.

  • Non-Institutional Investors (NIIs): The standout performer, seeing a massive 23.53x subscription for its 40.46 lakh shares.
  • Retail Individual Investors (RIIs): Showing stable interest with a 4.63x subscription for 94.42 lakh shares.
  • Qualified Institutional Buyers (QIBs): Have subscribed 3.48 times for 40.46 lakh shares.

The IPO consists of a fresh issue of Rs 380 crore and an offer for sale (OFS) of up to Rs 59.5 crore, with a price band set at Rs 161-170 per share.

Grey Market Premium and Listing Expectations

Investor sentiment in the unofficial grey market remains highly optimistic. Currently, Knack Packaging shares are trading at a Grey Market Premium (GMP) of approximately 17% over the upper price band. If these trends hold, the stock is expected to list near Rs 198 per share on the BSE and NSE, providing potential listing gains for early investors. The tentative listing date is scheduled for July 8.

Business Model and Financial Performance

Knack Packaging is a key player in the flexible bulk packaging segment, holding an estimated 10.1% market share in India's PLWPP (Printed and Laminated Woven Polypropylene) bags market. The company serves over 1,950 customers across 71 countries, including global giants like Cargill and domestic players like KRBL and DCM Shriram.

The company's financials demonstrate a clear upward trajectory:

  • Revenue: Increased to Rs 823.4 crore in FY26 from Rs 736.5 crore in the previous year.
  • Net Profit: Rose to Rs 92.8 crore in FY26, up from Rs 73.8 crore in FY25.
  • EBITDA: Improved to Rs 152 crore, with margins expanding to 18.5%.

The fresh proceeds from the IPO are primarily earmarked for capital expenditure, with Rs 320 crore allocated to constructing a new manufacturing facility in Borisana, Gujarat.

Brokerage Outlook: Long-Term Growth Potential

Major brokerages, including Choice Broking and Anand Rathi, have recommended a "Subscribe" rating for the long term. Analysts believe the company's integrated manufacturing model and aggressive export-led growth strategy justify its valuation, which sits at approximately 22.4 times FY26 earnings.

While the outlook is positive, investors should remain mindful of risks such as global economic slowdowns, foreign currency fluctuations, and customer concentration.

Key Takeaways

  • Strong Demand: The IPO has been subscribed 8.34x, driven significantly by Non-Institutional Investors (23.53x).
  • Potential Gains: A current GMP of 17% suggests a potential listing price near Rs 198.
  • Growth Focused: Proceeds will primarily fund a new Gujarat facility to support the company's expanding global footprint.