Lohia Corp's ₹1,100-crore IPO values the capital goods player at 22x earnings. But a small, cyclical market and high book-value multiple argue against subscribing.
Alpha Score of 48 reflects weak overall profile with strong momentum, weak quality. Based on 2 of 4 signals – score is capped at 75 until remaining data ingests.
Lohia Corp's IPO, open until July 27, is an offer for sale of shares worth about ₹1,100 crore. Promoters and a few public shareholders are selling a 24.5% stake. Promoter holding will drop to 75.2% from 95.6% after the issue.
The company is valued at a market cap of nearly ₹4,500 crore at the top of the price band, or 22x trailing earnings. That looks cheap next to peers like LMW (129x P/E), Jyoti CNC (54x), and Rajoo Engineers (20x). But the discount is there for a reason.
Lohia Corp makes machines for the woven Raffia market, a slice of the technical textiles industry. Raffia is a plastic-based fabric used in woven sacks for cement, fertiliser, and food grain packaging, and in flexible intermediate bulk containers (FIBCs). The global woven Raffia machines market is about $1 billion. Lohia is the second-largest player worldwide with a 15% share and the leader in India at 41%.
Revenue and net profit grew at compound annual rates of 21% and 159% over FY24-26. EBITDA margin more than doubled from 9% to 19.5% in that period, and PAT margin went from 2.5% to 11.7%. The company is net debt-free when liquid mutual funds are included, and it has generated positive free cash flow in all three fiscals. Capacity utilisation is about 50%. The order book stood at ₹1,359 crore as of FY26, about 80% of that year's revenue.
The numbers look strong. The question is whether they are sustainable.
The market is small and barely growing
The woven Raffia machines market was valued at $1.06 billion in 2025 and is projected to reach $1.37 billion by 2030, a compound growth rate of 5.3%, according to the RHP. That is the same level it was at in 2021 – $1.38 billion. Adjusted for inflation, the market would have barely grown over a decade.
Cyclicality is baked into the business
Almost 95% of the market depends on industries like cement, agriculture, fertilisers, and infrastructure – all vulnerable to economic slowdowns. Lohia Corp's prospects track capex cycles in those end-use industries. The long useful life of the machines means replacement demand is not a reliable buffer.
The FY24-26 growth figures look amplified partly because of a low base in FY24, which followed a post-Covid demand normalisation. The company's earnings rely heavily on operating leverage, the RHP suggests. Sustaining that momentum will require good market demand.
Plastic risk is real
Raffia bags are reusable and recyclable, but they are still plastic. Future bans in favour of alternatives like jute-based packaging are a possibility that the RHP itself flags.
Valuation is not cheap on book value
At 8.6x net assets, Lohia Corp trades at a price-to-book ratio second only to Jyoti CNC's 9x among peers. The peer group range is 2.8x to 9x, with a mean of 6.3x.
The company is a leader in a niche market with strong recent financial performance. But the addressable market is small, growth is tepid, cyclicality is high, and the valuation on book value is at the top of the peer range. Those factors, combined with the geopolitical uncertainty the RHP cites, make this IPO one to sit out.
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