Is KSH International IPO a smart bet for long-term investors?

Synopsis

KSH International plans to raise ₹420 crore via fresh equity for capacity expansion and debt repayment, alongside a ₹290 crore offer for sale. The company, a leading magnet winding wire manufacturer, is poised to benefit from EV market growth and infrastructure investments.

ET Intelligence Group: KSH International, a manufacturer of magnet winding wires, plans to raise ₹420 crore through fresh equity to fund capacity expansion and repay debt along with ₹290 crore through an offer for sale. The promoter shareholding will decline to 71.4% from 98.4% after the IPO.

The company is expected to benefit from the rapid expansion of electric vehicle (EV) market and the government's push for investments in infrastructure, power and renewable energy.

However, it exhibits higher supplier concentration and longer working capital cycles. Given these factors, the issue is suitable for long-term retail investors with a higher risk tolerance.

Business

Incorporated in 1979, the company is the country's third-largest manufacturer of magnet winding wires by production capacity and the largest exporter by revenue in FY25.

Its products are used across sectors including power, renewable energy, railways, and home appliances. It exports to 24 countries including USA, UAE, Germany, Japan, and Saudi Arabia.

It had an installed capacity of 29,045 metric tonnes per annum (MTPA) as of June 30, 2025, which is expected to increase to 59,000 MTPA by March 2027. Its business is highly dependent on a few suppliers, with its top 10 accounting for 98.5% of the total cost of raw materials and components purchased in FY25.

Agencies

can be Selective: EV-led demand and infra tailwinds, coupled with margin gains, make the issue fit for long-term investors with higher risk appetite

Financials

Revenue increased to ₹1,928 crore in FY25 from ₹1,050 crore in FY23, reflecting a compounded annual growth (CAGR) of 36%. Net profit after tax grew by 60% annually to ₹68 crore in FY25 from ₹27 crore in FY23. Operating margin before depreciation and amortisation (Ebitda margin) improved to 6.4% in FY25 from 4.8% in FY23. It was higher than 4-4.2% for peers.

Return on equity rose to 22% in FY25 from 14% in FY23. Net working capital days increased to 80 in FY25 from 73 in FY23, indicating an extended collection cycle that may affect cash flows.

The debt-equity ratio rose to 1.2 in FY25 from 0.6 in FY23, It is much higher than 0.04-0.6 for peers given its efforts to increase capacity. However, the interest coverage ratio improved to 4.2 in FY25 from 3.6 in FY23 as rising capacity aided profit growth.

Valuation
The issue is valued at a trailing price-earnings (P/E) multiple of 38 based on post-IPO equity and FY25 net profit. It is lower than 50.6 and 40 for peers such as Precision Wires India and Ram Ratna Wires respectively.

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