Mumbai, 25 September 2025 — Motilal Oswal Financial Services, through its wholly owned subsidiary, has executed a significant investment in the textile manufacturing space. The company has acquired 16.44 lakh equity shares along with over 10.95 lakh compulsorily convertible preference shares of Kusumgar Limited, a leading player in synthetic engineered fabrics. The deal, valued at approximately ₹100 crore, underscores Motilal Oswal’s expanding strategy of diversifying into industrial and niche manufacturing sectors.

Transaction Highlights

According to exchange filings, the subsidiary of Motilal Oswal purchased 16,43,836 equity shares in addition to 10,95,890 preference shares. The total value of the acquisition is pegged at ₹100 crore. Importantly, the transaction was carried out on an arm ’s-length basis and does not fall under the ambit of related-party transactions. Furthermore, the company clarified that no regulatory approvals were necessary for completing this deal, enabling a swift execution timeline, expected to be finalized within a week.

This investment signals confidence in the future potential of Kusumgar, a company known for its innovative solutions in synthetic textiles, especially in high-performance and engineered fabric applications.

Strategic Rationale

Motilal Oswal has traditionally been recognized for its financial services, broking operations, and asset management. However, in recent years, the group has broadened its investment portfolio to include high-growth and industrial sectors. The latest transaction reflects this strategic direction, with specialty textiles providing a differentiated opportunity compared to the company’s conventional exposure to financial markets.

Kusumgar’s focus is on engineered synthetic fabrics, including nylon, polyester, and polyurethane-based solutions that cater to industries demanding high strength, durability, and performance. By investing in a specialized player rather than a mass-market textile firm, Motilal Oswal is positioning itself to benefit from rising demand in segments like coated fabrics, laminated textiles, and industrial composites.

Financial Trajectory of Kusumgar

Kusumgar has demonstrated robust financial performance in recent years. The company’s turnover has shown impressive growth, moving from ₹301 crore in FY2023 to projections of nearly ₹779 crore by FY2025. This trajectory underscores the company’s ability to expand market presence while scaling capacity.

For Motilal Oswal, such a performance record strengthens the case for capital deployment. The scale of this investment indicates a long-term orientation, with the potential for Motilal Oswal to become an influential shareholder in the textile firm.

Implications for the Textile Sector

This acquisition also has broader implications for India’s textile industry. For decades, textiles have been viewed as a traditional and often cyclical sector. However, specialty and technical textiles are increasingly recognized as high-margin businesses with global demand potential. Barriers to entry in this segment are higher due to the need for advanced technology, stringent quality standards, and customer certifications.

The investment comes at a time when India is positioning itself as a global manufacturing hub under the “China+1” strategy. With multinational companies diversifying their supply chains, demand for specialized and high-performance fabrics is expected to rise. Kusumgar, with its niche offerings, is well placed to benefit from this shift.

Broader Investment Strategy

The Kusumgar deal is not an isolated move. Motilal Oswal has, in recent years, stepped up direct investments in growth-oriented companies across different sectors. Earlier this year, the group invested in emerging businesses in the consumer technology and logistics space. By adding textiles to its investment basket, Motilal Oswal is signaling its intent to balance exposure between new-age sectors and traditional industrial pillars.

Analysts note that such diversification provides a hedge against market volatility. While financial markets and consumer tech can be sensitive to investor sentiment, industrial sectors often deliver steady returns over longer cycles. Specialty textiles, in particular, offer resilience due to their focus on industrial and defense applications where demand remains relatively stable.

Risks and Challenges

Despite the positives, the investment does come with its share of risks. Valuation remains a critical factor — at ₹100 crore, the deal implies significant expectations of Kusumgar’s future growth. If the company fails to scale as projected, the internal rate of return may fall short of targets.

The textile sector also faces challenges related to raw material price volatility, especially since synthetic fabrics are dependent on petrochemical derivatives. Fluctuations in global crude oil prices could directly impact margins. Additionally, global trade dynamics, tariff changes, and regulatory hurdles in export markets may pose challenges.

Finally, the question of exit strategy remains important. Whether Motilal Oswal intends to back Kusumgar until a potential public listing, pursue a trade sale, or gradually exit through secondary market transactions will influence investor perception in the medium term.

Outlook

For now, the deal has placed Motilal Oswal firmly in the spotlight as one of the few financial services firms making bold bets on industrial manufacturing. If Kusumgar continues its growth trajectory and expands into new markets, this investment could deliver attractive returns and become a showcase example of diversification.

The acquisition of 16.44 lakh shares marks not just a financial transaction but a strategic step into India’s evolving textile future. With global demand for engineered fabrics rising and domestic manufacturing gaining momentum, Motilal Oswal’s timely investment could set the tone for more financial players exploring opportunities beyond their core domains.

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