Synopsis: A technical textile company is positioning itself for long-term growth by strengthening its presence in defence and aerospace, supported by capacity expansion, export opportunities, and demand across multiple end markets.
The shares of this small cap company majorly engaged in manufacturing woven, coated, and laminated synthetic fabrics serving across aero space and defence, were in focus after the company positions itself for a long term growth by strengthening its presence across aerospace and defence
With the market capitalization of Rs. 5912 Crores, the shares of this recently listed company i.e, Kusumgar Ltd were trading at around Rs. 563 per share which is 10.7 percent discount from its 52 week high of Rs. 631 per share and is trading at a P/E of 67 whereas industry P/E stands at 18.7
Defence Business Offers Significant Growth Opportunity
The company’s aerospace and defence (A&D) fabrics business contributes 45–50% of its revenue over the last five years and remains its highest-margin segment, delivering operating margins of over 25%.
Despite its strong presence, the company holds only 3–4% market share in India and less than 0.5% globally, leaving significant room for expansion. The domestic A&D fabrics market is expected to grow at around 20% CAGR over the next five years to nearly $1.5 billion, while the global market is projected to reach around $8.5 billion, growing at about 10% CAGR.
Higher Defence Spending Supports Long-Term Demand
Rising geopolitical tensions, including conflicts such as Russia-Ukraine, India-Pakistan, Israel-Palestine and ongoing US-Iran tensions, have increased defence spending across the world. India’s defence capital outlay has grown from a 4% CAGR during FY21–25 to an expected 17% CAGR during FY25–27, reaching ₹2.2 trillion by FY27 Budget Estimates.
Globally, defence spending is expected to rise from $2.9 trillion in CY25 to $3.7 trillion by CY30, while India’s defence spending is projected to increase from $92 billion to about $142 billion, growing at around 9% CAGR, creating a favourable environment for defence textile manufacturers.
Strong Competitive Position with Diversified Growth
The company has built a strong position in technical textiles with over 1,000 specialised fabric SKUs, expertise in fine-denier weaving, Nylon 6/66 processing, and in-house coating and lamination. It is one of the major manufacturers of military parachute fabrics outside the US and China and an authorised partner for India’s Gaganyaan mission.
Its four business segments reduce dependence on a single market. In FY26, while defence revenue declined, Industrials and Outdoor grew by 46% and 120%, respectively, limiting the overall revenue decline to around 11%. The company also achieved the highest EBITDA margin among its listed peers in FY26
Strong Growth Profile Supports Premium Positioning
The company operates in a niche defence-focused engineered fabrics business with no direct listed comparable in India. Compared with domestic technical textile players such as Garware Technical, Garware Hi-Tech, SRF and Arvind’s AMD division, it has delivered the fastest growth and the highest EBITDA margin.
While Taiwan-based Formosa Taffeta is the closest global comparable, it operates with a much lower net margin of around 2–3% and is witnessing a decline in revenue. In contrast, the company combines high growth, high margins and strong returns, making it difficult to compare with conventional technical textile companies.
Capacity Expansion Leaves Plenty of Room to Grow
The company has recently completed a major capacity expansion, increasing its processing capacity from 46.9 million metres to 127.8 million metres, while weaving capacity has increased from 19.7 million metres to 34.2 million metres. Even after this expansion, capacity utilisation stood at only 49.5% for processing and 62.5% for weaving in FY26. This provides enough room to increase production without significant additional investments, allowing future demand to be met using existing facilities.
Exports Could Become a Key Growth Driver
The company is well placed to benefit from improving export opportunities as India’s duty disadvantage in key markets such as the UK and the European Union continues to narrow. Over the past three years, India has signed free trade agreements (FTAs) with the UK, EU, UAE, Australia, and New Zealand.
The India–UK FTA, expected to come into effect in July 2026, will reduce import duties to 0%, while the India–EU agreement is expected to be implemented in H1CY27. Exports contributed around 40% of the company’s FY26 revenue, with Germany accounting for 11.2% of revenue, ahead of the US at 9.3%, positioning the company to benefit from rising export demand.
Conclusion:
The company is well placed to benefit from rising defence spending, growing demand for specialised technical textiles, and improving export opportunities. Its strong presence in high-margin defence fabrics, diversified business model, recently expanded manufacturing capacity, and significant room for market share gains provide a solid foundation for long-term growth. Continued recovery in defence orders could further strengthen its financial performance.
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