Should investors subscribe to Lohia Corp’s IPO?

The IPO of capital goods player Lohia Corp is open for subscription until July 27 (Monday). It is entirely an offer for sale of shares worth about ₹1,100 crore. Promoters (20.4 per cent) and a few public shareholders (4.1 per cent) are set to offload stake totalling to 24.5 per cent. Promoters’ stake is expected to reduce to 75.2 per cent after the public issue, from the current 95.6 per cent.

At the ceiling of the price band, the company is valued at a market cap of almost ₹4,500 crore or 22x trailing earnings. Given the company’s better growth and financial metrics among its capital goods peers (as identified in the RHP; doesn’t have a directly comparable peer in the listed space), the valuation does appear cheap. Peers include the likes of LMW (129x P/E), Jyoti CNC (54x) and Rajoo Engineers (20x) trading in a P/E range of 20-120x. However, in the light of risk factors detailed here and given the bearing that challenging geopolitics has on markets currently, we recommend investors to give this IPO a pass for now.

Lohia Corp is a supplier of machines, operating within the broader technical textiles market. Technical textiles are engineered fabrics and have wide applications in packing materials, seatbelts, conveyor belts, tarpaulins, zippers, umbrella cloth, PPE kits, fire suits, bulletproof vests and others. The size of the technical textiles market is estimated at around $250 billion. Within this, the woven Raffia market accounts for about 30 per cent, estimated at about $74 billion.

Raffia is a plastic resin-based fabric made from Polypropylene (PP) or High-Density Polyethylene (HDPE) used in the production of woven sacks (used in cement, fertiliser, food grain packaging) and FIBCs (flexible intermediate bulk containers). The material is known for its lightweight, durable and recyclable properties. By application, the global woven Raffia market is concentrated 84 per cent in packaging and the rest in non-packaging purposes such as tarpaulins, ropes, twines, roof underlayment and pond liners. By end-use industry, cement tops at 36 per cent, followed by food, agri produce, chemicals & fertilisers, and infrastructure at 26 per cent, 21 per cent, 7 per cent and 5 per cent, respectively.

Lohia Corp is in the business of supplying machinery to the companies that operate in the above businesses. It is the second largest player globally in the woven Raffia machines market valued at about $1 billion, with a market share of 15 per cent. It is the market leader in India with a 41 per cent share. The company manufactures a wide range of machines right from those that extrude Raffia tapes from PP/ HDPE pellets, all the way to looms, printing (printing logos, etc.) and recycling plastic waste back to pellets.

In FY26, Lohia Corp derived 58 per cent of revenue from India and the rest from overseas markets. On an average (over FY24-26), revenue is equally split between domestic and overseas.

Over FY24-26, Lohia Corp’s revenue and net profit have grown at CAGRs of 21 per cent and 159 per cent, respectively. Gross margin has been in a narrow 43-44 per cent range, but EBITDA margin has gone up from 9 per cent in FY24 to 19.5 per cent in FY26, evidently due to operating leverage. Similarly, PAT margin has expanded from 2.5 per cent to 11.7 per cent.

Per the RHP, net debt to equity is 0.2x. However, on including the liquid mutual funds into cash, the company becomes net debt-free. It has generated positive free cash flows in all three fiscals presented. Overall capacity utilisation is also at about 50 per cent.

Fixed assets turnover ratio has increased from 2.9x to 4.4x and RoCE from 10.5 per cent to 40.9 per cent between FY24 and FY26.

Order-book stands at ₹1,359 crore, as of FY26, at about 80 per cent of FY26 revenue.

One, Lohia Corp is a leader in a market, which is not particularly large. The woven Raffia machines market valued at $1.06 billion, as of 2025, is projected to grow to $1.37 billion by 2030, barely compounding at ...