Karamtara Engineering Limited (Neutral)

Highlights

Karamtara Engineering Limited (KEL) incorporated in 1996, is a backward integrated manufacturer of products for renewable energy and transmission lines. They offers a diverse product portfolio, serving as a one-stop shop for solar structures (fixed-tilt and trackers), fasteners for solar energy and transmission sectors, and overhead transmission line hardware fittings.

KEL’s product portfolio includes solar structures (such as module mounting structures, tracker piles/piers, torque tubes), transmission lattice towers, fasteners (bolts, nuts, studs, washers), structural steel profiles (angles, channels, beams), and OHTL hardware fittings (insulator string fittings, jumper tubes, suspension clamps, vibration dampers). Further, also made foray into production of wind turbine towers (angular and tubular),

It has catered to 65 customers for solar products, comprising OEMs, EPCs and IPPs. Supported by a broad manufacturing footprint of 13 facilities (12 in India and one in Italy), KEL has been able to scale its operations and establish a global delivery model, exporting to over 50 countries across North America, Europe, Asia, Africa, Australia, and Latin America.

Out of the total proceeds of Rs. 8,750 mn, Rs. 6,000 mn would go towards funding prepayment, repayment and/ or payment obligations to lenders towards borrowings and acceptances, in part or full, and Rs. 750 would go towards funding general corporate purposes. Additionally, Rs. 2,000 mn would go towards promoter selling shareholders of the company.

Key Highlights

• The total installed renewable energy capacity is projected to grow from 5,149 GW in CY25 to 9,125 GW by CY30. Solar PV is projected to increase from 2,392 GW in CY25 to 5,328 GW by 2030. India is transitioning from coal-based power to renewable energy, with a projected total power generation capacity of 868 GW by FY31 and surpassing renewable energy target of 500 GW by 2030, including 282 GW from solar power.

• KEL place strong focus on backward integration, operating in-house galvanizing facilities and two rolling mill furnaces to manufacture various grades of structural steel used across the solar energy and transmission industries. This backward integrated setup provides significant competitive advantages, including supply chain efficiency, faster turnaround times, and cost benefits.
• KEL’s key differentiators include – (i) its ability to ensure prompt and reliable delivery of products, (ii) customize and tailor-make products as per customer requirements, (iii) continuously improve and enhance products to meet evolving customer needs, and (iv) maintain a strong focus on quality systems while modernizing its manufacturing facilities.
• KEL intends to leverage its wide product portfolio and strategic partnerships with a large customer base to drive upselling and cross-selling, while promoting bundled solutions catering to turnkey project requirements for hybrid renewable park, thereby strengthening revenue growth, sustain margins, and build long-term competitive advantages.
• KEL is setting up a new structural steel profile manufacturing facility to strengthen its footprint in the solar energy and transmission line sectors. It is also setting up a solar stamping parts facility to widen its product portfolio, and entering the BESS structures business through its subsidiary. Further, it is establishing a PEB structures facility to expand into steel-based structures for data centres and transmission converter stations. Alongside, aims to grow international sales through expanded capacity, in-house galvanizing and a new Saudi Arabia facility, targeting high-potential markets.
• KEL’s key growth strategies includes (i) To expand existing installed capacity in India, (ii) strengthen market position in renewable energy industries and related infrastructure sectors through new product development and expansion into allied offerings, (iii) focus to increase customer base in international markets, and (iv) continue to improve operational efficiency and implement cost reduction measures by enhancing the capacity of existing facilities and realignment of capacities.
• The sales of the company have grown by 33.34 pct CAGR over FY24-26 and EBITDA/profit has grown 37.64 pct CAGR/49.28 pct CAGR over same year. In FY26 the company reported sales of Rs. 43,120 rose 36.52 pct YoY. EBITDA of the company rose 43.62 pct YoY to Rs. 4,981 mn. In FY26 the company posted profit of Rs. 2,288 mn, which increased 64.18 pct YoY.

Key Risk

• KEL operations are significantly dependent solar industry, any adverse trend in the solar energy industry could have adverse effect its business operations and results.
• KEL operate in highly competitive markets in each of its product categories and an inability to compete effectively may adversely affect results.

Financial Performance

Source: – RHP.

Peer Comparison based on FY26 Financials.

Source: – RHP.

Valuation

Karamtara Engineering Limited (KEC) is backward integrated company which manufactures solar mounting structures and tracker components. Currently they offer a diverse product portfolio which enables them to serve as a one-stop shop for solar structures (fixed-tilt and trackers), as well as lattice towers for transmission lines, fasteners and OHTL hardware fittings and accessories, and further plan to enter the wind energy sector through manufacturing of tubular towers for wind turbines. At the upper end of the price band of Rs. 254, the issue is priced at an PE of 35.7x its FY26 post issue capital. The issue appears to be fully priced.

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