Knack Packaging IPO Day 3: Subscription Hits 8.34x With 17% GMP

The ₹439.5 crore Knack Packaging IPO has demonstrated significant momentum as it enters its final day of bidding, drawing strong interest from both high-net-worth individuals and retail investors. With the issue already subscribed 8.34 times, market sentiment suggests a potentially lucrative listing on the BSE and NSE.

As of the third day of bidding, the Knack Packaging IPO has seen robust demand across all major investor segments. Out of the 1.89 crore shares on offer, the issue has been subscribed 8.34 times. The breakdown of participation highlights a significant appetite among sophisticated investors:

  • Non-Institutional Investors (NIIs): Leading the charge, the NII segment has been subscribed 23.53 times, signaling high confidence from HNI (High Net-worth Individual) bidders.
  • Retail Individual Investors (RIIs): Steady participation is evident, with the retail portion booked 4.63 times.
  • Qualified Institutional Buyers (QIBs): Institutional interest remains moderate but healthy, with a subscription rate of 3.48 times.

The IPO features a fresh issue of ₹380 crore and an Offer for Sale (OFS) of up to ₹59.5 crore, with a price band set between ₹161 and ₹170 per share.

Grey Market Premium Signals Healthy Listing Gains

Investor optimism is further bolstered by activity in the grey market. Currently, Knack Packaging shares are trading at a Grey Market Premium (GMP) of approximately 17% over the upper price band. If this trend persists, the shares are expected to list near ₹198, providing a substantial cushion for investors looking for immediate listing gains upon the scheduled debut on July 8.

Business Moat and Financial Growth Trajectory

Knack Packaging operates as an integrated manufacturer of Printed and Laminated Woven Polypropylene (PLWPP) bags. The company holds an estimated 10.1% market share in India's flexible bulk PLWPP bags segment and maintains a massive global footprint, exporting to 71 countries and serving over 1,950 customers, including giants like Cargill and KRBL.

The company’s financial health appears robust. For FY26, revenue from operations rose to ₹823.4 crore, up from ₹736.5 crore in the previous year. Net profit also saw a significant jump to ₹92.8 crore from ₹73.8 crore in FY25, while EBITDA margins expanded to 18.5%. A key driver for future growth is the planned utilization of ₹320 crore from the fresh issue to construct a new manufacturing facility in Borisana, Gujarat.

Expert Outlook: Is It Worth the Investment?

Brokerages such as Choice Broking and Anand Rathi have both assigned a "Subscribe" rating for the long term. They point toward the company's integrated manufacturing model and expanding export presence as key competitive advantages. At the upper price band, the IPO is valued at roughly 22.4 times FY26 earnings, which analysts consider a fair valuation given the company's growth profile. However, investors should remain mindful of risks including global economic slowdowns and foreign currency fluctuations.

Key Takeaways

  • Strong Demand: The IPO is subscribed 8.34x so far, driven by a massive 23.53x subscription in the NII category.
  • Positive Listing Outlook: A 17% GMP suggests a potential listing price of around ₹198 per share.
  • Growth-Focused Capital: Proceeds are primarily earmarked for a new ₹320 crore manufacturing facility in Gujarat to bolster capacity.