Why:
- A certification the customer legally needs, and it is winning. Kanohar is one of five firms in India certified to build 500 MVA 400 kV grid transformers, and one of two for 220 kV railway Scott transformers (T3, corroborated for the railway leg by trade press). Utilities cannot buy these units from an uncertified vendor. High-voltage revenue went from ₹28 cr to ₹341 cr in two years, and a ₹569 cr POWERGRID order anchors the book (T1).
- Growth is booked, not promised. The order book stands at ₹1,818 cr, 2.8 times last year's revenue, and the factory is running at only 46% of capacity, so the next leg of growth needs no new plant (T1). Behind it sits a funded, multi-year national transmission build-out (T2).
- Price: about 38.6x last year's earnings at the cap. The filing's own peer set runs from 32x to 160x with a 107x average (T1) — but every transformer maker's margin has roughly doubled in this cycle, so the multiple sits on earnings that may be a peak, not a floor (T2).
Valuation at the band
| Floor ₹601 (T1) | Cap ₹632 (T1) | |
|---|---|---|
| Bid window | 8 to 10 September 2026 | |
| Bid lot | 23 shares | |
| Fresh shares | 49,91,680 | 47,46,835 |
| Post-issue shares | 7,94,31,680 | 7,91,86,835 |
| Market capitalisation | ₹4,774 cr | ₹5,005 cr |
| P/E on FY2026 profit | 36.8x | 38.6x |
| P/E excluding the prior-year tax credit | 37.8x | 39.6x |
| EV/EBITDA (net cash) | 26.1x | 27.4x |
| Promoter holding after | 78.4% | 78.6% |
At 36.8x to 38.6x the offer prices above the cheapest peer in its own table (32.19x) and far below the 107x average that the sector's cyclically doubled earnings have produced (T1). The price does not move the verdict; the six blocks judge the business, not the band.
The story
You are buying a 54-year-old Meerut transformer maker that moved up the voltage curve at exactly the moment India's grid build-out made high-voltage transformers scarce: revenue 2.4x and profit 7.3x in two years, with the next two years already sitting in the order book.
What this business is
Kanohar builds power transformers, the machines that step electricity up and down between power plants, transmission lines and railway systems. Its customers are almost entirely government: POWERGRID, state transmission utilities and Indian Railways, won through tenders where only certified vendors may bid — 93% of revenue comes from its top ten customers (T1). The company has climbed from commodity distribution transformers into the certified high end: 400 kV-class grid units, now 52% of revenue, and specialised Scott transformers that feed railway traction lines, a niche with two Indian makers.
Manufacturing happens at one plant complex in Meerut (83% of revenue from the main Gangol site), with tanks and radiators made in-house. A legacy substation-construction (EPC) arm is winding down at 16% of revenue and falling. The company was listed decades ago, delisted voluntarily in 2010, and returns to the market 99.7% family-owned (T1).
Easy or difficult business? The top of the voltage range is genuinely hard: a 400 kV transformer must survive a short-circuit test few labs can run, and certification plus a two-year proven-operation record are tender entry conditions. That is a real barrier — but it is a ticket to the table, not pricing power: the same certificates hang on the walls of BHEL, Hitachi, Toshiba and TRIL, all far larger, a sixth qualifier arrived in April 2026, and Kanohar wins about one tender in five it bids (T1/T2).
Key numbers
| ₹ cr | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Revenue | 276.7 | 450.6 | 653.8 |
| Revenue growth % | n/a | 62.9 | 45.1 |
| Gross margin % | 28.8 | 32.5 | 38.9 |
| EBITDA | 31.1 | 93.4 | 180.4 |
| EBITDA margin % | 11.2 | 20.7 | 27.6 |
| PAT | 17.8 | 65.1 | 129.7 |
| PAT growth % | n/a | 266.7 | 99.2 |
Profit grew far faster than revenue, and the mechanism is structural: about two thirds of the margin climb is the mix shifting from thin EPC and trading into high-voltage transformer manufacturing, and a third is a semi-fixed cost base spread over 2.4x the revenue — each new rupee of sales dropped about 40 paise to EBITDA (T1). Two honest qualifiers: the window opens on a year in which revenue fell 8.9%, which flatters the growth rates, and the whole sector's margins have expanded in this cycle, so the level is partly the market's, not only the company's.
| Segment, ₹ cr | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Transformer manufacturing | 143.2 | 383.8 | 545.5 |
| Transformer growth % | n/a | 168.0 | 42.1 |
| EPC (substations and lines) | 133.0 | 66.0 | 107.5 |
| EPC growth % | n/a | -50.4 | 62.8 |
Scorecard
| Block | Rating | Why |
|---|---|---|
| Right to win | PASS | The customer's why is eligibility: utilities must buy certified, and Kanohar is inside a five-member club at the 400 kV top end and a two-member club in railway Scott units, with the win proven in the revenue and a ₹569 cr POWERGRID order (T1/T3). Bounded honestly: the same certificates belong to much larger rivals, a sixth qualifier arrived this year, the win rate inside eligible tenders is ~15-20%, and a Bihar utility briefly debarred the company this year — eligibility is the edge, not pricing power. |
| Industry and TAM | PASS | India's transmission build-out is funded (~₹9 lakh cr to FY32) and transformers are scarce worldwide, with 24-48 month lead times (T2). Kanohar holds roughly 2% of the power-transformer market. The railway niche is small and slow; the growth engine is the grid. |
| Financial momentum | PASS | Real, structural margin expansion with a 70% return on capital — but only 20% of FY2026 profit became operating cash, retention money owed by customers stretched, and ₹325 cr of guarantees stand behind the order book: the model eats working capital as it grows (T1). |
| Risks, governance, RPTs | MARGINAL | Clean on the severe tests: no promoter litigation of any kind, no pledge, related-party dealings at 2.8% of revenue. But the hygiene record is genuinely middling: two auditor resignations in seven months before the IPO auditor arrived, six Companies Act adjudication applications still pending, historical share records that cannot be traced, and the debarment episode (T1). |
| Promoter and cap table | PASS | Three generations of the Singhal family, a real scaling arc with falling leverage, no pledge, and the family keeps ~78% after the offer (T1). |
| Offer structure | PASS | Clean mechanics: ₹300 cr fresh for certified capacity capex and working capital, no debt object, no pre-IPO games. The family trust's offer for sale takes out ~₹750 cr at the cap — 2.5 times the fresh money — while selling only 17% of its stake (T1). |
Watch out for
- The margin is partly the cycle's. Every listed transformer maker roughly doubled margins since FY2022 and two have already started fading; large industry capacity lands by FY2028 (T2). The first results should show margins holding as the order book converts — that is the re-check.
- Profits are not yet cash. FY2026 turned 20% of profit into operating cash; retention money owed by customers stretched from 22 to 38 days of revenue, and bank guarantees of ₹325 cr (87% of net worth) stand behind the government order book (T1).
- Two auditors resigned within seven months — both citing personal circumstances — before the current national firm arrived in February 2025 and examined all three restated years cleanly; six Companies Act adjudication applications from the pre-IPO cleanup are still pending (T1).
- A Bihar utility debarred the company in February 2026 over delays and defects on an EPC job, withdrawing the order in May after remediation. On a 93%-government order book, a repeat would bite (T1).
The offer
- Raising ₹1,019 cr at the floor to ₹1,056 cr at the cap: a ₹300 cr fresh issue plus an offer for sale of 1.20 crore shares by the promoter family trust, worth ₹719 to 756 cr at the band (T1).
- For capacity and backward-integration capex at the Meerut plant (₹64 cr) and incremental working capital (₹155 cr), with general corporate purposes inside the regulatory cap; there is no debt to repay (T1).
- Implied valuation is in the table above: ₹4,774 cr to ₹5,005 cr at the band.
- Promoters and family hold 99.72% before the offer; the trust sells 16.6% of its stake and the family holds about 78.5% after (T1).
Initial assessment from the RHP with outside checks on the load-bearing claims. Numbers carry source tiers: (T1) the filing's audited sections and official records, (T2) exchange or established outside data, (T3) the filing's commissioned industry chapter, UNVERIFIED where nothing supports them. Not a recommendation. The valuation section states what the announced band implies and is not a view on whether that price is right. This RHP, dated 2 September 2026, supersedes the DRHP filed in January 2026; this note reads the RHP.