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, print (printing logos, etc.) and recycle 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 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 5.3 per cent (per the RHP).

Two, the woven Raffia market is highly cyclical, mimicking the pace of broader economic activity. Almost 95 per cent of the market is concentrated in industries such as cement, agriculture, fertilisers and infrastructure which are vulnerable to economic slowdowns. Prospects for Lohia Corp will largely depend on capex cycles in the end-use industries and the long-expected useful life of the machines it supplies also do not help generate replacement demand. As said above, though the woven Raffia machinery market is forecast to reach $1.37 billion by 2030, it will still be at the same level as it was at the end of 2021 — $1.38 billion. Adjusting for inflation, the market would have barely grown in a decade, by 2030.

Three, Lohia Corp’s business model is not an exception to this cyclicality and earnings seem to be highly dependent on operating leverage — the company might need good market demand to sustain earnings momentum. A reason why FY24-26 growth figures appear amplified is because of a low base created in FY24, following a decline/ normalisation of post-Covid demand.

Four, there are risks inherent to the woven Raffia market. Despite being reusable and recyclable, Raffia bags are still plastic, possibly subject to future bans in favour of alternatives such as jute-based packaging.

Five, Lohia Corp is expensive in its peer group in terms of price-to-book value (P/B) ratio at 8.6x net assets — second only to Jyoti CNC’s 9x. P/B ratio range of the peer group is between 2.8x and 9x with a mean of 6.3x.

Published on July 25, 2026