Kanohar Electricals

IPO Size: Rs. 1,056 cr

• Fresh Issue of Rs. 300 cr (6% dilution) for (i) working capital Rs.155 cr (ii) capex Rs. 64 cr
• Offer for Sale (OFS) of Rs. 756 cr by promoter (99.7% stake to drop to 78.6%)

Price band: Rs. 601-632 per share

M cap: Rs. 5,005 cr (IPO is 21% of m cap)

IPO Date: Tue 8^th Sep to Thu 10^th Sep 2026, Listing Wed 16^th Sep 2026

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

 

Transformer Manufacturer

Kanohar Electricals is a 48 year old Meerut, Uttar Pradesh, based transformer maker, generating half of its Rs. 650 cr topline from high-voltage (>400 kV capacity) transformers. Business is split into two segments

1. Transformer Manufacturing (83% of revenue): 2 plants in Meerut with 19,200 MVA aggregate installed capacity.
2. EPC: undertakes engineering, procurement and construction (EPC) projects for sub-stations and transmission lines.

Business is entirely domestic-facing, catering mainly to government clients.

 

Higher Margins Products

Company is one of the 5 companies in India to have short circuit test certification for 500 MVA 400 kV transformers (others being BHEL, Hitachi Energy, Toshiba Transmission, TARIL) helping it bid for large high-value contracts from government entities. It is also 1 of 4 Indian Railways-certified maker of scott transformers, used in railways and metro.

 

Recent Growth

As production volume jumped 55% YoY to 8,830 MVA in FY26, revenue grew 45% YoY to Rs. 654 cr, with EBITDA excluding other income up 93% YoY to Rs. 180 cr, mix of high-voltage transformers strengthened to 52%, from 31% in FY25.

Due to high operating leverage, PAT doubled YoY to Rs.130 cr, leading to 20% net margin in FY26. On small equity of Rs. 15 cr (FV Rs. 2 each), EPS stood at Rs. 17.43. On net worth of Rs. 373 cr, ROE is strong at 42%. Company is net debt free, with cash surplus of Rs. 56 cr.

 

Strong Outlook

As of 31.3.26, order book of Rs. 1,818 cr, doubled in last 1 year due to inflow of power transformers and shunt reactors (used in renewable energy), including Rs. 569 cr order from PowerGrid for 500 MVA 400 kV transformer in June 2025. This leads to a healthy book-to-bill of 2.8x.

While current capacity utilization is only 46%, to meet growing sector demand, company is undertaking brownfield expansion of 18,000 MVA capacity with an investment of Rs. 40 cr. This will nearly double capacity over the next 2 years and potentially revenue over next 3 years, if execution is sustained, as company operates on ~20x fixed asset turnover ratio. Company is earmarking Rs. 115 cr from fresh issue proceeds towards working capital (~110 days) to sustain growth.

 

Priced for Growth

Market cap of Rs. 5,005 cr and enterprise value (EV) of Rs. 4,948 cr lead to historic EV/EBITDA and PE multiples of 26x and 36x respectively. Estimating an optimistic Rs. 1,200 cr revenue for FY27E with EPS at about Rs. 26, current year PE multiple is 24x, which is attractive for high product margins, cash-rich balance sheet and long term growth visibility.

Not comparing to larger transformer makers like BHEL, Hitachi, CG, Siemens Energy, GE Vernova due to Kanohar’s significantly smaller topline, but medium sized peers such as Transformers and Rectifiers, Voltamp, Indo Tech, Shilchar, Atlanta Electricals are trading anywhere between PE multiples of 25x to 50x, varying with company specific factors, making Kanohar’s pricing justified for its high growth.