Why Sunil Singhania Just Bet ₹37 Crore on the Plastic Chair Company

Almost every Indian has sat on a Nilkamal chair. It is in temples, wedding halls, roadside dhabas, government offices and living rooms across the country. That white plastic chair is one of the most recognised objects in India. And it is almost certainly not the reason one of the country’s most respected investors just put 37 crore rupees into the company.

The chair is the distraction. What sits behind it is a lot more interesting, and understanding that gap is the whole point of this breakdown.

What actually happened

On 16 July 2026, Abakkus Investment Managers, the firm founded by Sunil Singhania, bought 2,80,000 shares of Nilkamal in an open market bulk deal on the NSE at an average price of ₹1,335.63. That is a purchase worth about 37.4 crore rupees, and on Nilkamal’s roughly 1.49 crore shares, it works out to close to 1.9 percent of the company.

Two things make it worth studying. First, Abakkus did not appear as a large holder in the June shareholding, which points to this being a fresh entry rather than a top up. Second, it was not the only institution buying that day. Setu Securities picked up another 14.57 crore rupees worth in the same session, and both trades were delivery based, not intraday, which signals investment intent rather than trading. The stock has since jumped sharply, so anyone reading this is looking at a very different price from the one these buyers paid, a point I will come back to.

A quick but important clarification on who Singhania is, because it gets muddled. He was the Chief Investment Officer for Equities at Reliance Mutual Fund, one of the largest equity pools in the country, before he left in 2018 to start Abakkus. Abakkus itself is not a mutual fund. It runs PMS and AIF products, so this is his firm deploying capital under his process, not necessarily his personal money.

The business behind the chair

Nilkamal was built by the Parekh family and is the world’s largest maker of moulded plastic furniture. But furniture is only one of four engines, and arguably not the most important one.

The first and least glamorous engine is material handling. Nilkamal is India’s clear market leader in the crates, bins, pallets and metal storage racking that factories, warehouses, cold chains and logistics companies run on. It processes and sells more than 1,25,000 tonnes of material a year. This is a dull, unbranded, business to business operation, and it is exactly the part that is quietly compounding. Its metal racking business grew 22 percent in FY26.

The second engine is the famous moulded furniture, the chairs and tables, plus a lifestyle furniture range. The third is mattresses and foam, where a newly commissioned foam plant has ramped to roughly 4,000 tonnes and the company has been adding premium products like rebonded and rolled foams. The fourth is retail, the stores it has now unified under the Nilkamal Homes brand, along with its Bubbleguard packaging line. It exports to around 30 countries and runs joint ventures with German and American partners in storage and cold chain.

So the mental image of a plastic chair company is wrong. This is a diversified materials and home solutions company where the biggest structural tailwind sits in the least visible division.

Standing in Singhania’s shoes

I cannot read his mind, so treat what follows as a framework for why a value focused investor might find this attractive, not as a claim about his exact reasoning.

Start with price. When Abakkus bought at ₹1,336, the stock was sitting nearly 58 percent below its all time high of ₹3,180 made back in August 2021. It had been a poor performer for two years, drifting while the broader market rose. For an investor who likes to buy neglected leaders when the crowd has lost interest, that is the starting condition, a strong franchise available well off its peak.

Then look at the turn in earnings. FY26 revenue rose about 14 percent to ₹3,686 crore, and profit came in around 105 crore rupees. More telling is the shape of the recovery. The March quarter profit was up nearly 22 percent over the previous year and up more than 60 percent over the preceding quarter. After two weak years, the profit line is inflecting upward, and that inflection is usually what a patient investor is trying to catch before the market notices.

Now the part most people miss, the warehousing angle. India is in the middle of a structural build out of warehouses, logistics parks, cold chains and organised retail, pushed along by e-commerce and the shift of manufacturing into the country. All of that needs crates, pallets and racking, and Nilkamal is the market leader in exactly those products. That is the hidden growth engine behind the plastic chair image, and it grew 22 percent last year.

Layer on the quality signals. Promoters hold a solid 64.54 percent with nothing pledged, so the family’s interests are aligned with outside shareholders. The company has been reducing debt and pays out about 26 percent of profit as dividend, including a 20 rupee final dividend this year, which is real cash and hard to sustain if the profits were not real. And there is operating leverage sitting in the model. Because margins are thin, even a modest recovery in volumes and a ramp in the foam and racking businesses can lift profit meaningfully from a low base.

Put together, the case looks like this. A neglected market leader, well below its peak, at the start of an earnings recovery, with a genuine structural tailwind that the market ignores because it fixates on the low margin chair. That is a recognisable value setup. Whether it plays out is the open question, which is why the risks matter as much as the thesis.

The risks, stated plainly

The core weakness is return on equity. Over the last three years Nilkamal has earned only about 8 percent on its equity, which is low, and it tells you this has not historically been a high quality compounding machine. Until that number improves, the stock is a recovery bet, not a franchise that quietly doubles your money.

Margins are thin. Around 105 crore of profit on 3,686 crore of revenue is a net margin under 3 percent. That leaves little cushion when costs move.

And costs do move, hard. The main raw materials are crude linked plastics like polypropylene and polyethylene, so a spike in oil prices can compress margins quickly. This input sensitivity is the single biggest reason Nilkamal’s profits have swung so much over the years.

Cash conversion needs watching. Some data providers flag that operating profit is not fully converting into cash, with receivables rising faster than sales. That is a working capital signal to track each quarter, not a crisis, but worth keeping an eye on.

Competition is everywhere. Furniture, mattresses and retail are all crowded, from Supreme and Cello in plastics, to Sleepwell, Kurlon and the newer online mattress brands, to Godrej Interio and IKEA in furniture retail. The retail arm in particular has historically been a drag on margins.

Valuation has moved. This is the timing risk. The buyers got in around ₹1,336, but the stock has since jumped roughly 20 percent, so today’s price is very different, and at that higher level it trades at a fuller multiple. Buying because an institution bought, at a price well above what they paid, is a trap worth naming.

And the position is small. Abakkus bought under 2 percent, which for a fund is a starter position, an opening bet, not a bet the farm conviction call. Read it as an expression of interest, not certainty.

The bottom line

Nilkamal is a neglected market leader whose most exciting division, the crates and racking that ride India’s warehousing boom, is hidden behind its most boring image, the plastic chair. Its profits are recovering, its balance sheet is sound, its owners are aligned, and a respected investor has just made a fresh, if small, entry near the lows. That is the encouraging half.

The sober half is that this is a thin margin, low return, input sensitive business that has run up sharply in a matter of days, so the easy price is already gone. A big investor’s name tells you where to look. It does not tell you what to pay or how much risk you can carry. Watch the return on equity, the raw material costs and the pace of the racking business over the next few quarters, and decide with your own eyes whether the recovery is as real as the buyers are betting.

This article is for educational purposes only. It is not investment advice and not a buy, sell or hold recommendation. I am not a SEBI registered research analyst or investment adviser. All figures are drawn from the company’s exchange filings, results and AGM statement, and public financial data, and they can change as new information is filed, so verify the latest numbers before acting. Please do your own research or consult a SEBI registered adviser before investing. Markets carry risk, including the risk of permanent loss of capital.