IGI Logo

An Established Transformer Manufacturer with Growth Visibility…

Kanohar Electricals Ltd (KEL), originally incorporated in 1972, is one of India's established transformer manufacturers catering to the power transmission, railways, renewable energy and power distribution sectors. The company manufactures power transformers, Scott transformers, traction transformers, shunt reactors and distribution transformers, while also executing EPC projects involving substations and transmission lines. Transformer Manufacturing remains the key revenue driver, contributing ~83.4% of FY26 revenue, while EPC Business contributed ~16.4%.

* India's transformer market is expected to grow from US$4.9 billion in CY25 to US$6.9 billion by CY30 at a CAGR of ~6.7%, driven by grid expansion, electrification and infrastructure investments.

* During FY24-FY26, KEL delivered strong financial growth, with revenue increasing from Rs276.7cr to Rs653.8cr and PAT rising from Rs17.8cr to Rs129.8cr. Growth was driven by robust transformer demand, healthy order inflows, operating leverage and improved execution efficiency.

* The company delivered a sharp improvement in profitability over FY24-FY26, with EBITDA margin expanding from 11.2% to 27.6% and PAT margin rising from 6.4% to 19.9%. Strong earnings growth, operating leverage and enhanced execution efficiency drove robust returns, with FY26 ROE and ROCE standing at 42.1% and 51.6%, respectively.

* As of March 2026, KEL's order book stood at Rs1,818.3cr (2.8x FY26 revenue), offering strong revenue visibility. Transformer Manufacturing contributed ~89% of the order book, while EPC projects accounted for ~11%.

* KEL operates a 19,200 MVA transformer manufacturing capacity and plans to utilize IPO proceeds for capacity expansion and operational enhancement. The company is also expanding its advanced transformer portfolio to benefit from growing power infrastructure demand.

* At the upper price band of Rs632, KEL is valued at ~38.5x FY26 EPS, available at a discount compared to its listed peers. The company offers attractive investment merit backed by strong order-book visibility, leadership in the transformer segment, healthy profitability, strong return ratios, low leverage and favorable industry tailwinds. We recommend a 'Subscribe' rating for investors with a medium- to long-term investment horizon.

Purpose of IPO

The IPO comprises a fresh issue of Rs300cr and an offer for sale (OFS) of Rs756cr. Net proceeds from the fresh issue will be utilized towards funding capital expenditure (Rs64.2cr), meeting incremental working capital requirements (Rs155cr) and for general corporate purposes.

Key Risks

* High dependence on Transformer Manufacturing Business (~83.4% of FY26 revenue).

* Reliance on government & government-controlled entities (~85.4% of FY26 revenue).

* Customer concentration remains elevated, with the top 10 customers contributing ~93.2% of FY26 revenue.

For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer
SEBI Registration Number: INH200000345