Karamtara Engineering

Karamtara Engineering

By Geetanjali Kedia
about 23 hours ago

One Liner: All for Growth

IPO Size: Rs. 875 cr

  • 77% of IPO is Fresh Issue of Rs. 675 cr (8% dilution) for repaying Rs. 600 cr of Rs. 1,350 cr gross debt as of 31.7.26
  • 23% is Offer for Sale (OFS) of Rs. 200 cr by promoter (92% to reduce to 82%)

Price band: Rs. 241-254 per share

  • In July 2026, company raised Rs. 75 cr at Rs. 254 per share  

M cap: Rs. 8,174 cr (IPO is 11% of m cap)

IPO Date: Wed 9th Sep to Fri 11th Sep 2026, Listing Thu 17th Sep 2026

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

 

Solar Energy Component Maker

Karamtara Engineering is a Mumbai-based manufacturer of solar mounting structures and tracker components for solar energy, accounting for 80% of Rs. 4,300 cr topline. Balance revenue comes from towers for transmission lines and wind turbines, fasteners, hardware fittings and accessories for overhead transmission line etc.

Company has 13 plants (8 in Maharashtra, 4 in Gujarat and 1 in Italy) with aggregate installed capacity of 8.9 lakh MTPA (including 4.9 lakh MTPA for solar products equivalent to ~16.81 GW) and 4.8 lakh pieces of hardware fittings. Of this, 3.1 lakh MTPA was established in FY26. This is the reason capacity utilisation moderated to 60% in FY26, despite 29% YoY rise in production volume. Presently, exports account for nearly half the revenue. 

 

High Growth Visibility

As of 31.3.26, net fixed assets stood at Rs. 1,164 cr with capital work in progress at Rs. 485 cr. Company incurred a capex of Rs. 900 cr in FY26, including Rs. 400 on a greenfield plant in Saudi Arabia, to commence operation in phases over the next few quarters. As company clocks a fixed asset turnover ratio over 4x, this implies revenue visibility of close to Rs. 4,000 cr, once the capacity fully operational.

Thus, FY26 revenue of Rs. 4,312 cr can potentially double over the next few years. This is in line with high historic growth rates, wherein revenue jumped from Rs. 1,250 cr in FY22, implying 36% revenue CAGR in past 4 years.

 

EBITDA Margin higher than Reported

Since company has backward integrated manufacturing facility, including galvanizing and rolling mill, it clocks EBITDA margin of 14.6%, adjusted for outward transportation cost and duty, which are pass-through costs. Company’s reported EBITDA margin stood at 11.6% for Rs. 498 cr EBITDA in FY26.

As FY26 revenue jumped 37% YoY supported by 29% volume growth, EBITDA rose 44% YoY and PAT jumped 65% YoY to Rs. 229 cr. On a large equity of Rs. 292 cr (face value Rs. 10 each), EPS stood at Rs. 7.8.

Company’s working requirement is high, with outstanding debtors at over 4 months. Even gross debt rose from Rs. 1,030 cr as of 31.3.26 to Rs. 1,354 cr as of 31.7.26. Post IPO, net debt to equity ratio will be 03:1 while net debt to EBITDA will be high at 0.9:1.   

 

Priced for Growth

M cap of Rs. 8,174 cr and Enterprise Value of Rs. cr lead to a current year PE multiple of 21x and an EV/EBITDA multiple of 13x, on FY27E EPS of close to Rs. 12. This is attractive for 21-22% RoE and high growth visibility, although solar module makers are ruling at similar multiples for high margins and growth rate.

In Jan 2025, Karamtara had raised Rs. 307 cr from UHNIs at Rs. 310 per share. After 20 months, IPO is priced at a 18% discount, primarily due to contraction in valuation multiples in the renewable energy sector.