Kanohar Electricals Ltd

Kanohar looks like a decent company to us. It competes in the higher voltage segment, which requires more technical know how has fewer competitors and fetched higher margins. It is one of only five Indian firms certified for 500 MVA 400 kV power transformers and one of only two approved for 100 MVA 220 kV Scott transformers. The promoter pedigree is strong  with four promoter directors being IIT engineers from Roorkee, Bombay and Delhi who have spent their whole careers in this business, the client base is strong with companies Powergrid, Blue Star, BNC Power Projects etc. The quality of revenue and margins is also improving as the EPC share has come down from 48.06% of revenue in FY 24 to 16.44% in FY 26 while transformer manufacturing has gone up from 51.75% to 83.43% over the same period ,this is also reflected in EBITDA margin moving from 11.23% to 27.59%.

However, along with these there are a few caveats like - revenue concentration is high, with the top ten customers at 93.16% and the top one alone at 31.28%. The FY 24 auditor reported under CARO that interest had not been charged on a loan, the company replied that the auditor got it wrong, later the audit firm was replaced before the IPO. Note 43 shows Kanohar's filings differ from its own books in all twelve quarters from June 2023 to March 2026, with March 2026 showing INR 11.49 Cr more debtors and INR 29.30 Cr less owed to suppliers than the ledger. The three year cumulative CFO to post tax EBITDA is just 39%, which means very little of the reported profit is turning into cash as the money is getting stuck in incremental working capital.

At the current IPO price of INR 632 the company is valued at market capitalisation of INR ~5,000 Cr, valuing it at 39.5x core earnings and 27.7x EV/EBITDA on FY 26 numbers, which is on the higher side, and we would tend to track it rather invest at this stage. The current GMP of ~31% suggests decent listing gains, though GMP is not a reliable indicator of listing performance and is based on a very opaque market.
