Kanohar Electricals Ltd

Kanohar Electricals Limited

Incorporated in November 1972 Kanohar Electricals Limited manufactures power transformers of up to 500 MVA and 400 kV for transmission utilities, Indian Railways, renewable developers and distribution companies. It also undertakes turnkey EPC work for substations and transmission lines. The business is run by the third generation of the Singhal family, and four of the six individual promoters are IIT engineers. The company makes five types of transformers. Power transformers were 57% of FY26 revenue, Scott transformers 25%, traction transformers ~1% and distribution transformers 0.1%. Shunt reactors earned nothing in FY26 or FY25. Transformer manufacturing was 83% of revenue and EPC 16%. Revenue from units above 400 kV rose from 10% of sales in FY 24 to 52% in FY 26.

DRHP filed: January 23, 2026

RHP filed: September 2, 2026

IPO open & close: 8 September 2026 to 10 September 2026

Price band: INR 601 to INR 632 per share, face value INR 2.

Issue structure: Total offer INR 1,055.74 cr, with fresh issue of INR 300 Cr. & OFS of INR 755.74 Cr.

Selling shareholder: K Sons Family Trust, sole promoter selling shareholder.

Listing date (tentative): 16 September 2026

BRLMs: Nuvama Wealth Management Limited and IIFL Capital Services Limited

Registrar: MUFG Intime India Private Limited

Auditor: S S Kothari Mehta & Company, Chartered Accountants

Disclaimer. Delta Partners (public market division under Dexter Capital) is a SEBI registered Investment Advisor, this report does not constitute a recommendation but is only prepared for educational purposes. We (our team members including our directors) may or may not apply to IPO. This note is not reviewed by our CIO, Devendra Agrawal, CFA. It is prepared by our team of Investment Analysts, and is reviewed by our senior team members. Any questions related to the IPO can be directed to shubham@deltainvest.in and we will come back. We at Delta Partners continue to analyse many businesses and IPOs. Investors interested in being part of this network are requested to fill the form and our team will reach out with more details. [Click Here]

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Can Subscribe for Listing Gains | GMP: ~31% (7th September 2026)

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.

Business Overview

• Incorporated in November 1972 in Meerut, Uttar Pradesh, Kanohar Electricals manufactures power transformers of up to 500 MVA and 400 kV for transmission utilities, Indian Railways, renewable developers and discoms.

• The company has five product types:

• Power transformers, ~57% of revenue, up to 500 MVA and 400 kV, which step voltage up or down on transmission grids. Kanohar is one of five Indian firms certified for 500 MVA 400 kV units.
• Traction transformers, ~1% of revenue, of 30.24 MVA at 132 kV and 220 kV, which feed electric trains.
• Scott transformers, ~25% of revenue, of 100 MVA at 220/2 x 55 kV and 132/2 x 55 kV, which convert three phase power to two phase for high speed rail. Kanohar is one of only two Indian firms certified at 100 MVA 220 kV.
• Shunt reactors, nil revenue in FY26 and FY25, up to 125 MVAR and 400 kV, which hold voltage steady on wind and solar.
• Distribution transformers, 0.13% of revenue, up to 5.5 MVA and 33 kV, which step power down for homes and businesses.

• FY26 revenue was INR 653.84 crore, split between transformer manufacturing at 83% and EPC at 16%, with scrap sales making up the rest. Within transformers, power transformers contributed INR 373.28 crore and Scott transformers INR 165.38 crore. Shunt reactor’s revenue contribution was nil in FY 26 or FY 25.

• The company owns two plants in Meerut, at Rithani since 1983 and Gangol since 1997, with 19,200 MVA of installed capacity running at 45.99% utilisation. The order book stood at INR 1,818.32 crore, of which 93.62% came from government customers.

• The business is largely B2G. Government tenders brought in 85.37% of FY 26 revenue, split between central agencies at INR 306.80 crore and state utilities at INR 251.40 crore. Private inquiry led sales contributed the balance of INR 95.64 crore. The client list includes Powergrid, Blue Star, BNC Power Projects and Bhutan Power Corporation.

• Capacity utilisation has inscreased from 16.46% in FY 24 to 29.70% and 45.99% in FY 26, growth has come from increasing utilization in existing plant. Customer concentration is high, with the top ten accounting for 93.16% of FY 26 revenue and the largest single customer alone at 31.28%.

• Sales are spread across states but the mix changes every year, since a handful of large tenders decide where the revenue lands. Rajasthan led FY 26 at INR 131.10 crore or 20.05%, followed by Punjab at INR 108.60 crore or 16.61% and Gujarat at INR 99.55 crore or 15.23%. Punjab had been just 6.98% in FY 25, Gujarat was nil in FY 24, and Bihar jumped from 1.33% to 9.33%.

Industry

• India's transformer market grew from USD 3,691.4 million in CY19 to USD 4,944.9 million in CY25 at a 5.0% CAGR, and is projected to reach USD 6,854.2 million by CY30 at 6.7%. Power transformers specifically go from USD 2,455.9 million to USD 3,673.6 million, an 8.4% CAGR. Between CY25 and CY30 the extra high voltage segment is expected to grow at 9.3% and ultra high voltage at 8.9%, the segments Kanohar sells into are growing faster than the market.

• India added about 12,000 Ckm, or circuit kilometres, of lines in FY26, expects around 66,000 Ckm by FY27 and 143,000 Ckm cumulatively till FY32, with 400 kV taking the largest share. Renewable capacity of 274.6 GW in FY26 is meant to reach around 594 GW by FY32, which drives shunt reactor and grid stabilisation demand.

• Entry is gated at three levels. Short circuit certification is compulsory for 132 kV and above and is tested only at CPRI, ERDA or NHPTL. Vendor registration with each utility takes months and requires factory audits. Tender qualifying requirements demand prior supply of equal or higher rating, which favours incumbents. Only BHEL, Hitachi Energy India, Toshiba T&D India, Transformers and Rectifiers and Kanohar hold certified high voltage transformers.

• One of the key raw materials is CRGO steel (Cold rolled grain oriented), which makes up ~30% of a transformer's raw material bill. Global production sits with 10 to 12 companies and the technology is closely held. India has one plant at Nashik with capacity of 50,000 tonnes a year against domestic demand of about 400,000 tonnes, most of it is imported from Japan, South Korea, the USA and Germany. In January 2025 JSW Steel and JFE Steel of Japan bought thyssenkrupp Electrical Steel India for INR 4,159 crore through their 50:50 venture for CRGO steel production, their new Vijayanagar unit is due at full production within 2027.

• Rising T&D capex has tightened the CRGO supply chain and suppliers now prefer buyers who can pay advances or take shorter credit. The certified competitors are also expanding hard. Toshiba T&D India is taking EHV transformer capacity from 30,000 to 42,000 MVA with INR 562 crore of spend, Siemens is doubling its Kalwa plant from 15,000 to 30,000 MVA, and Hitachi Energy has committed about INR 2,100 crore over five years.

Use of Proceeds

• Total offer INR 1,055.74 crore, comprising an offer for sale of INR 755.74 crore and a fresh issue of INR 300 crore. The offer for sale is 71.6% of the total and the company receives none of it. Net proceeds of the fresh issue are earmarked as follows:

• Capital expenditure at the Gangol Manufacturing Facility: INR 64.18 cr, excluding GST, covering new machinery and equipment to raise transformer capacity and automate backward integration at INR 40.00 cr, civil construction and interiors for a new office building at INR 12.04 cr, and rooftop solar at both plants plus electric trucks and forklifts at INR 12.15 cr.

• Incremental working capital: INR 155.00 cr, to be deployed entirely in FY 27.

• General corporate purposes: balance, not quantified in the RHP, capped at 25% of gross proceeds.

• The machinery is expected to add 18,000 MVA of annual capacity, nearly doubling the present 19,200 MVA.

Promoters and Management

• Kanohar was set up in 1972 by the late Kanohar Lal Singhal and is now run by the third generation. Four of the six individual promoters are IIT engineers who have spent their careers in this business.

• Dinesh Singhal, 71, is Chairman and Managing Director. He holds a bachelor's degree in industrial engineering from IIT Roorkee and has been a director since June 1976, so nearly fifty years with the company, with over 40 years in transformer manufacturing. He was earlier president of both FISME and the Indian Industries Association and is currently an independent director on the board of Shivalik Small Finance Bank.

• Adesh Singhal, 68, is a Whole-time Director and Dinesh's brother. Electrical engineering from IIT Roorkee, with the company since April 1981, and he runs engineering and quality assurance.

• Vivek Singhal, 48, is a Whole-time Director and Dinesh's son. B.Tech in electrical engineering from IIT Bombay, joined in 2000, with 25 years in marketing, business development and strategy. He drove the pan-India expansion and the move into EPC for substations and transmission lines.

• Abhishek Singhal, 46, is a Whole-time Director and Dinesh's other son. B.Tech in electrical engineering from IIT Delhi, joined in 2002, with 23 years in design, technology development and systems integration. He heads design and development and also looks after the ERP system and IT.

• Virat Singhal, 43, and Aditya Singhal, 39, are sons of Adesh Singhal and are promoters but not directors. Virat has an engineering degree from Nagpur University and an MBA from the International University of Japan, and is enrolled with the Bar Council of Delhi. He handles commercial and legal work and joined in 2015. Aditya has a mechanical engineering degree from BITS Pilani and an executive MBA from Delhi Technological University, with 13 years in GIS design and manufacturing, and joined in 2012.

• The independent director Ram Kumar Chugh has 43 years in transmission and distribution, was a vice president at Siemens, served as president of IEEMA and sits on the Omax Autos board. Ashok Kumar Goel is an IIT Roorkee engineer with 27 years in electrical instrumentation. Anil Bhardwaj is Secretary General of FISME. Dr Sangeeta Khorana is a professor of international trade policy at Aston University and the woman independent director. All four were appointed on 3 July 2025, and a fifth appointee, Anil Girotra, resigned on 8 October 2025 with no reason disclosed.

• Pre-offer, K Sons Family Trust holds 97.00% and Kanohar International Private Limited 2.72%, with 45 shareholders in total. Brijesh Singhal and Kanohar International were declassified as promoters by a board resolution of 27 November 2025, the day after Brijesh Singhal resigned as Whole-time Director and as a trustee of K Sons.

Findings

• Short circuit testing is compulsory for transformers of 132 kV & above and only CPRI, ERDA and NHPTL can carry it out. As of 31 Mar 26 only five Indian companies hold that certification for 500 MVA 400 kV units BHEL, Hitachi Energy India, Toshiba T&D India, Transformers and Rectifiers and Kanohar. Kanohar is the smallest company in that group.

• Only four Indian firms are RDSO approved for 100 MVA 132 kV Scott transformers and only two are approved at 100 MVA 220 kV. Kanohar has approval for both these categories. Scott transformer revenue went from nil in FY 24 to INR 165.38 crore in FY 26, almost a quarter of company sales from a product that was introduced only recently.

• CARE report suggest higher voltage classes need more design capability and tighter quality control, only few firms compete in this space. Revenue above 400 kV went from 10.30% of sales in FY 24 to 52.17% in FY 26 and gross margin rose 1,008 basis points over the same period. Bigger transformers need more technical know how and face less competition and command better margins.

• Kanoha’s EPC revenue fell from 48% of sales in FY 24 to 16% in FY 26 when transformer manufacturing rose from 52% to 83%. The company is shifting from poor quality revenue EPC work to higher quality revenue of Transformer manufacturing, also the margins is EPC segment are lower compared to manufacturing, this shift has resulted in EBITDA margin went 11%, then 21%, then 28%.

• Of 35 live customer contracts at 31 March 2026 only four are fixed price and the other 31 carry price variation or escalation clauses. Given that CRGO steel and copper drive majority of the cost and both are volatile, higher share of this variable pricing suggest that the company has negotiating power and can protect it's margin passing on material price hike to customers.

• Four promoter directors are IIT engineers. Dinesh Singhal, IIT Roorkee, joined 1976 and is an independent director at Shivalik Small Finance Bank. Adesh Singhal, IIT Roorkee, 1981. Vivek Singhal, IIT Bombay, 2000. Abhishek Singhal, IIT Delhi, 2002. No promoter faces any criminal, tax or SEBI proceeding. Independent director Ram Kumar Chugh has worked 43 years in transmission, a stint as vice president at Siemens and a term as IEEMA president and Ashok Kumar Goel is an IIT Roorkee engineer with 27 years in the sector.

Issues

• BSPTCL(Bihar State Power Transmission Company Limited) debarred Kanohar and its JV partner Aquarian Enterprises for three years on 23 February 2026 over delay and execution defects on a substation and transmission line job. It withdrew the order on 14 May 2026 but only conditionally with the right to reinstate "without prejudice and prior notice" if punch point work missed 30 June 2026. The work was finished on that date. Bihar was Kanohar's fourth largest state in FY 26 at INR 60.97 Cr up from 1.33% of sales in FY 25 to 9.33%.

• CRGO steel makes up ~30% of a transformer's raw material bill. Global production sits with 10 to 12 companies and the technology is closely held. India has one plant at Nashik, capacity 50,000 tonnes a year, against domestic demand of about 400,000 tonnes. So most of it is imported from Japan, South Korea and Europe. T

• Revenue from the top 10 clients was ~95%, ~94% and ~93% for FY24, FY25 and FY26 respectively, while revenue from the top 1 customer was ~26% in FY24, 24% in FY25 and 31% in FY26. However, the state-wise revenue mix changes every year, which means the top client changes every year, i.e. a different client could be the top 1 each year. But as the names aren't disclosed, this could still be a risk. Also, most of the discoms are already in very poor shape and most of the company's revenue comes from govt clients, any delay in receivables could be an issue.

• The FY 24 auditor, M/s R P S G & Co flagged in its CARO report that the company had not charged interest on a loan. The company's reply was that the auditor got it wrong "due to oversight" and that no such loan was ever given. That auditor was then replaced by S S Kothari Mehta from FY 25, about a year before the IPO filing.

• The Note 43 of financial statement shows the figures Kanohar sent lenders differ from its own books in all 12 quarters from June 2023 to March 2026. In March 2026 it reported INR 11.49 Cr more debtors and INR 29.30 Cr less owed to suppliers than its ledger showed. Both make the borrowing base look bigger. On that basis the returns support 18.5% more borrowing room than the books at March 2026 and 19.3% more at March 2025.

• Kanohar was previosuly listed in 1995 on three exchanges: the Bombay Stock Exchange on 13 November, the Delhi Stock Exchange in November and the Uttar Pradesh Stock Exchange in October. It voluntarily delisted from all three in 2010 citing low liquidity and thin trading volumes. Dinesh Singhal and Adesh Singhal were on the board throughout that period.

Financials