KSH International IPO review (Not Rated)

•    The company is the third largest manufacturer of magnet winding wires in India.
•    Its customer list includes many marquee names to whom it supplies the products regularly.
•    The company marked steady growth in its top and bottom lines for the reported periods.
•    Its export volumes have grown year-on-year and it aims to increase its share going forward.
•    Based on its recent financial data, the issue appears fully priced. 
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
KSH International Ltd. (KIL) is the third largest manufacturer of magnet winding wires in India in terms of production capacity in Fiscal 2025 (Source: CARE Report). It is also the largest exporter of magnet winding wires from India in terms of export revenues in Fiscal 2025 (Source: CARE Report). The company commenced its operations in 1981 by manufacturing magnet winding wires in Taloja, Raigad, in Maharashtra. KIL is a part of the KSH group, a diversified business conglomerate, with presence in logistics, infrastructure, services, and distribution. Over the years, its commitment to quality, innovation, and customer satisfaction has been recognized by several of key customers.

Over the last four decades it has diversified operations to include manufacturing various types of standard and specialized magnet winding wires which are tailored to customer specific requirements. Its key products include round enameled copper/ aluminium magnet winding wires, paper insulted rectangular copper/ aluminium magnet winding wires, continuously transposed conductors, rectangular enameled copper/ aluminum magnet winding wires and bunched paper insulated copper magnet winding wires. KIL’s products are critical components of capital goods such as transformers, motors, alternators and generators. These products (transformers, motors, alternators and generators) find application in end-use industries such as power (generation, transmission and distribution), renewables, industrials, railways, automotive (EV and ICE), home appliances, refrigeration and air conditioning.

The company markets and sells products through its brand ‘KSH’, which has developed a strong brand recall and reputation in the industry over the years. It had 122, 117 and 117 customers during the financial years ended March 31, 2025, March 31, 2024, and March 31, 2023, respectively. Further, during the three-month period ended June 30, 2025, it invoiced 93 customers. Its key customers are primarily OEMs, and include, Bharat Bijlee Limited, Virginia Transformer Corporation, Bharat Heavy Electricals Limited, Georgia Transformer Corporation, Hitachi Energy India Limited, Siemens Energy India Limited, GE Vernova T&D India Limited, Hind Rectifiers Limited, Transformers and Rectifiers India Limited, Indo-Tech Transformers Limited, TBEA, Atlanta Electricals Limited, Toshiba Transmission & Distribution Systems (India) Private Limited, Meidensha Corporation, SGB-SMIT GmbH and Retrasib S.R.L., CG Power and Industrial Solutions Limited, Nidec Industrial Automation India Private Limited, Al Ahleia Switchgear Co. , Emirates Transformer & Switchgear Limited.

KIL is an approved supplier of insulated rectangular wires and CTC for certain entities, used in High Voltage Direct Current (“HVDC”), 765 kV extra high voltage (“EHV”) transformers and reactors. The magnet winding wire industry presents significant barriers to entry, primarily due to stringent pre-qualification requirements imposed by corporate, state, central government, and international organizations during their procurement processes (Source: CARE Report).

The company has a significant global footprint and is exporting its products to 24 countries as of June 30, 2025, including, amongst others, USA, UAE, Kuwait, Romania, Saudi Arabia, Germany, Oman, Spain, Bangladesh and Japan. As of June 30, 2025, it operates three manufacturing facilities with a combined annual installed capacity of 29,045 MT. Two of these facilities are located in Chakan, Pune in Maharashtra and one in Taloja, Raigad in Maharashtra. Additionally, operations in its fourth facility in Supa, Ahilyanagar (formerly Ahmednagar) in Maharashtra, has commenced from September 2025.

The company has been able to diversify its products range from manufacturing paper insulated rectangular copper magnet winding wire to various other types of standard and specialized magnet winding wires mainly due to its technological capabilities and new product/ process development initiatives, which it benefits from. Its development team employs engineers, designers and technicians for engineering new products, modify and develop new processes and help in cost reduction. This technical support has enabled it to deliver tailored solutions across diverse industries by helping its sales and marketing teams better understand and meet customer requirements. Its earnings from exports grew year-on-year. As of June 30, 2025, it had 157 employees on its payroll and additional 28 contract workers in various department.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO worth Rs. 710.00 cr. (approx. 18489583 equity shares of Rs. 5 each at the upper cap). The issue comprises of fresh equity issue worth Rs. 420.00 cr. (approx. 10937500 shares at the upper cap) and an Offer for Sale (OFS) worth Rs. 290.00 cr. (approx. 7552083 equity shares at the upper cap). The company has announced a price band of Rs. 365 – Rs. 384 per equity shares of Rs. 5 each. The issue opens for subscription on December 16, 2025, and will close on December 18, 2025. The minimum application to be made is for 39 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 27.29% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 225.98 cr. for repayment/prepayment of outstanding borrowings in full or part, Rs. 87.02 cr. for capex on new machinery for expansion of Unit II and Supa facility, Rs. 8.83 cr. for capex on roof-top solar power plant for Supa facility, and the rest for general corporate purposes.

The two Book Running Lead Managers (BRLMs) to this issue Nuvama Wealth Management Ltd., ICICI Securities Ltd., while MUFG Intime India Pvt. Ltd., is the registrar to the issue. Nuvama Wealth and ICICI Securities are the syndicate members.

After issuing initial equity shares at par, the company has issued further equity shares in the price range of Rs. 25 – Rs. 32.25 per share (based on FV of Rs. 5), between June 2004, and February 2025. It has also issued bonus shares in the ratio of 5 for 1 in November 2013, and 4 for 1 in February 2025. The average cost of acquisition of shares by the promoters/selling stakeholders Rs. 0.00, Rs. 1.35, Rs. 1.36, Rs. 1.41, Rs. 1.51, and Rs. 530.00 per share.

Post-IPO, its current paid-up equity capital of Rs. 28.41 cr. will stand enhanced to Rs. 33.88 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 2601.82 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit, of Rs. 1056.60 cr. / Rs. 26.61 cr. (FY23), Rs. 1390.50 cr. / Rs. 37.35 cr. (FY24), and Rs. 1938.19 cr. / Rs. 67.99 cr. (FY25). For Q1 of FY26 ended on June 30, 2025, it earned a net profit of Rs. 22.68 cr. on a total income of Rs. 562.60 cr. 

For the last three fiscals, the company has posted an average EPS of Rs. 8.96 and an average RoNW of 19.07 %. The issue is priced at a P/BV of 6.79 based on its NAV of Rs. 56.58 as of June 30, 2025, and at a P/BV of 3.51 based on its post-IPO NAV of Rs. 109.43 per share (at the upper cap).

If we attribute FY26 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at negative P/E of 28.68.  Based on FY25 earnings also, the P/E stands at 38.29. Thus, the issue appears fully priced. 

The company has posted PAT margins of 2.52% (FY23), 2.69% (FY24), 3.51% (FY25), 4.03% (Q1-FY26), and RoCE margins of 13.25%, 14.15%, 16.60%, 5.26%, respectively, for the referred periods. However, its net debt/EBITDA at 9.27 as of June 30, 2025, raises alarm.

DIVIDEND POLICY:
The company has not declared any dividends for the referred periods of the offer document. It has already adopted a dividend policy in February 2025, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Precision Wires, and Ram Ratna Wires, as its listed peers. They are currently trading at a P/E of 38.3 and 40.3 (as of December 12, 2025). However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
The two BRLMs associated with the offer have handled 85 pubic issues in the past three fiscals, out of which 23 issues closed below the offer price on the listing date.