Raksan Transformers IPO (10 Sep-15 Sep) Analysis

Raksan Transformers Limited (formerly Raksan Transformers Private Limited, CIN: U31103DL1995PLC184910) is an ISO 9001:2015 certified manufacturer of electrical transformers headquartered in New Delhi. The company designs and manufactures a wide range of transformers including distribution transformers, power transformers, solar application transformers, and special purpose transformers.

The company operates two manufacturing facilities at HSIIDC Industrial Estate, Rai, Sonepat, Haryana. Its aggregate installed production capacity stands at 15,00,000 KVA per annum for distribution transformers and 1,350 MVA per annum for power transformers. As of June 30, 2026, Raksan employs 143 persons on a full-time basis.

Raksan primarily serves government utilities and electricity distribution companies (B2G segment), which contributed 50.73% of revenue in FY2026 (72.99% in FY2025). Its distribution transformer segment constitutes the largest revenue share at 64.18% in FY2026, with power transformers at 27.58%.

The company has a strong presence in Uttar Pradesh (58.56% of FY2026 revenue), Bihar, Madhya Pradesh, West Bengal, Haryana, and Jammu and Kashmir.

The promoter is Sanjeev Kanda (Chairman and Managing Director), who has approximately 31 years of experience in the transformer manufacturing industry. The promoter group also includes Dievam Singh Kanda and Renu Kanda. The group company SHR Power Private Limited (formerly Haryana Power Industries) manufactures transformer tanks, providing backward integration benefits.

Product Portfolio

Product Category	Key Range / Capacity	Primary Applications
Distribution Transformers	Up to 3,150 KVA	Electricity distribution utilities, state electricity boards, rural electrification
Power Transformers	High MVA ratings	Industrial, transmission, and infrastructure projects
Solar Application Transformers	Custom rated	Solar power plants, renewable energy infrastructure
Special Purpose Transformers	Custom designed	Specific industrial and utility requirements

Key Competitive Strengths

• ISO 9001:2015 certified manufacturing with BIS marked and BEE STAR rated products

• Strong order book of Rs. 32,967.92 Lakhs (83 orders) as of June 30, 2026

• Established customer relationships with government utilities, state electricity boards, and public sector entities across India

• Backward integration through associate group company SHR Power Private Limited for transformer tank manufacturing

• Experienced promoter with approximately 31 years in transformer manufacturing

• Capacity utilization of 91.68% for distribution transformers and 95.18% for power transformers in FY2026

SECTION 2: IPO BASICS

Issue Type	100% Book Built Issue
Fresh Issue	Up to 44,12,800 Equity Shares of Rs. 10 each (aggregating up to Rs. [to be determined] Lakhs)
Offer for Sale (OFS)	11,00,000 Equity Shares by Sanjeev Kanda (Promoter Selling Shareholder)
Total Issue Size	55,12,800 Equity Shares (Net Offer: 52,36,800 shares; Market Maker Reservation: 2,76,000 shares)
Face Value	Rs. 10 per Equity Share
Price Band	To be announced (100% Book Built; Floor Price and Cap Price to be determined)
Exchange	BSE SME Platform
Promoters	Sanjeev Kanda, Dievam Singh Kanda, and Renu Kanda
Book Running Lead Manager	Hem Securities Limited
Registrar	Bigshare Services Private Limited
Anchor Investor Date	Wednesday, September 09, 2026
IPO Open Date	Thursday, September 10, 2026
IPO Close Date	Tuesday, September 15, 2026
Basis for Allotment	To be finalised in consultation with BSE SME
Listing	BSE SME Platform

SECTION 3: USE OF PROCEEDS

The proceeds of the Fresh Issue (44,12,800 equity shares) are proposed to be utilized for the following purposes. The company will not receive any proceeds from the Offer for Sale portion.

Object of the Issue	Amount (Rs. Lakhs)	Deployment Timeline
Capital expenditure for new manufacturing facility at Liwaspur, Sub-Tehsil Rai, Sonepat, Haryana	6,213.66	FY 2027
Funding working capital requirements	3,500.00	FY 2027 (Rs. 2,700 Lakhs) and FY 2028 (Rs. 800 Lakhs)
Repayment of term loan (Indian Bank Loan Against Property)	728.34	FY 2027
General corporate purposes	Balance (max 15% of issue or Rs. 1,000 Lakhs)	FY 2027 and FY 2028
Total Identified Utilization (excl. GCP)	10,442.00

The primary capital expenditure object involves construction of a new manufacturing facility at Liwaspur, Sub-Tehsil Rai, Sonepat, Haryana. This facility is intended to expand the company's transformer manufacturing capacity beyond its current two facilities at HSIIDC Industrial Estate, Rai, Sonepat. The company has already placed orders aggregating to Rs. 5,506.47 Lakhs (approximately 75.86% of proposed capex) and has made an advance payment of Rs. 1,044.77 Lakhs against these orders.

SECTION 4: FINANCIAL PERFORMANCE

Raksan Transformers has delivered strong revenue growth over the past three fiscal years, with revenue from operations growing from Rs. 16,094.61 Lakhs in FY2024 to Rs. 36,310.82 Lakhs in FY2026, representing a compound annual growth rate of approximately 50% over the two year period. Profitability margins have improved consistently across the same period.

Income Statement Summary (Rs. Lakhs)

Particulars	FY 2026	FY 2025	FY 2024
Revenue from Operations	36,310.82	32,420.98	16,094.61
EBITDA	4,671.90	2,951.01	1,019.37
EBITDA Margin (%)	12.87%	9.10%	6.33%
Profit After Tax (PAT)	3,360.48	2,037.67	759.06
PAT Margin (%)	9.25%	6.28%	4.72%

Key Financial Metrics

Metric	FY 2026	FY 2025	FY 2024
EPS (Rs.)	20.39	12.36	4.61
Return on Net Worth (RoNW) %	43.41%	46.23%	32.03%
Return on Equity (ROE) %	55.32%	NA	NA
Return on Capital Employed (ROCE) %	46.72%	NA	NA
Net Asset Value per Share (Rs.)	46.97	NA	NA
Debt to Equity Ratio	0.27:1	NA	NA
Net Working Capital (Rs. Lakhs)	4,468.07	2,472.25	897.22

The weighted average EPS (pre-IPO, based on restated financials) is Rs. 15.08 and the weighted average RoNW is 42.45%. The company demonstrates a materially improving financial profile, with PAT growing from Rs. 759.06 Lakhs in FY2024 to Rs. 3,360.48 Lakhs in FY2026, a 4.4x increase in two years. The company's total outstanding borrowings as of March 31, 2026 stood at Rs. 2,073.64 Lakhs (Long Term: Rs. 824.66 Lakhs; Short Term: Rs. 1,248.98 Lakhs).

SECTION 5: PEER COMPARISON

The following listed companies have been identified in the Red Herring Prospectus as peers for the purpose of basis of offer price, as per SEBI (ICDR) Regulations, 2018. All peer data is as of FY2026 based on publicly available information. The industry average P/E (peer group) is 35.62x.

Company	Revenue (Rs. Lakhs)	P/E Ratio (x)	RoNW (%)	NAV (Rs.)
Marsons Ltd	24,503.09	49.63	21.28%	12.64
Shilchar Technologies Ltd	65,193.99	29.47	37.76%	429.05
Supreme Power Equipment Ltd	18,164.04	27.75	19.63%	47.30
Industry Average P/E (peer group)		35.62x
Raksan Transformers Limited	36,310.82	Price band TBD	43.41%	46.97

Raksan Transformers demonstrates materially superior return ratios compared to all listed peers, with RoNW of 43.41% well above Shilchar Technologies (37.76%), Marsons Ltd (21.28%), and Supreme Power Equipment (19.63%). In terms of revenue scale, Raksan at Rs. 36,310.82 Lakhs is positioned between Supreme Power Equipment and Shilchar Technologies. The company's NAV of Rs. 46.97 is close to that of Supreme Power Equipment (Rs. 47.30) and substantially above Marsons (Rs. 12.64).

KEY RISKS

Risk 1: High Dependence on Government and Public Utility Customers

Government and public utility customers (B2G segment) accounted for 50.73% of revenue in FY2026 (72.99% in FY2025 and 56.13% in FY2024). The transformer business is closely tied to investments in power generation, transmission, and distribution infrastructure, which are heavily driven by government policies on electrification, budgetary allocations, and renewable energy integration. Any adverse change in government procurement policies, budget cuts, or project slowdowns could materially impact the company's order book and revenue.

Risk 2: Competitive Bidding and Tender Risks

A significant portion of revenue is derived from government contracts awarded through competitive bidding processes. The company was barred from bidding for three consecutive tenders by Paschimanchal Vidyut Vitran Nigam Limited (PVVNL), Meerut, vide order dated June 20, 2019. While the company has received penalty orders from PVVNL Meerut totaling Rs. 261.93 Lakhs (quality related notices, settled with penalty), future disqualification or pricing pressure in tender processes could adversely affect revenue and order inflow. Pricing in competitive environments may result in reduced margins.

Risk 3: Customer Concentration and Revenue Dependency

The company is significantly dependent on a limited number of customers. The top 10 customers contributed 71.49% of revenue in FY2026, with top 3 customers accounting for 32.27% and top 5 customers for 46.36% of revenue in FY2026. The loss of one or more key customers, or a material reduction in business from any of them, could have a material adverse effect on revenue, profitability, and financial performance.

Risk 4: Geographic and Seasonal Concentration

The company derives 97.13% of its FY2026 revenue from customers located in Uttar Pradesh (58.56%), Bihar (14.22%), Madhya Pradesh (8.21%), West Bengal (1.38%), Haryana (7.79%), and Jammu and Kashmir (6.97%). This geographic concentration creates exposure to region-specific economic, regulatory, and market conditions. Additionally, the business is subject to seasonal variations: Q4 (January to March) contributed 41.77% of FY2026 revenues, reflecting the heavy concentration of government tender deliveries in the fiscal year end quarter.

Risk 5: Raw Material Sourcing and Price Volatility

The manufacturing process requires substantial quantities of Cold Rolled Grain Oriented (CRGO) Electrical Steel, Copper Wire, Copper Strip, Copper Sheet, Aluminium Wire, Strip, Sheet, Mild Steel, Transformer Oil, and other materials. Purchases from the top 10 suppliers accounted for 54.96% of total raw material procurement in FY2026. The cost of raw materials consumed was Rs. 29,115.04 Lakhs in FY2026, representing 80.18% of revenue from operations. The company does not maintain long-term supply agreements and procures through purchase orders, creating exposure to global commodity price fluctuations and supply disruptions.

Risk 6: Leased Facilities and Corporate Governance Concerns

Both manufacturing facilities are operated on a lease or rent basis from Haryana Power Industries (a promoter group entity). The company has paid stamp duty on the lease of property but has been unable to trace the registration documents. There can be no assurance that these leases will be renewed on commercially acceptable terms. Additionally, the promoter Sanjeev Kanda was previously a director in L S Steel Fabrication Private Limited, which was voluntarily struck off from the Registrar of Companies. Corporate records prior to 2006 (including forms filed with ROC, annual returns, statutory auditor appointments) are not traceable, and there have been historical delays in filing GST returns and EPF and ESI returns. None of the current Board of Directors has prior experience as a director in a listed company.

KEY POSITIVES

Positive 1: Exceptional Revenue and Profit Growth

Revenue from operations has grown from Rs. 16,094.61 Lakhs in FY2024 to Rs. 36,310.82 Lakhs in FY2026, a 2.26x increase in two years, reflecting a CAGR of approximately 50%. PAT has grown from Rs. 759.06 Lakhs in FY2024 to Rs. 3,360.48 Lakhs in FY2026, a 4.4x increase over the same period. EBITDA margins have nearly doubled from 6.33% in FY2024 to 12.87% in FY2026, demonstrating significant operating leverage as the company has scaled its revenue base.

Positive 2: Superior Return Ratios

The company demonstrates strong capital efficiency with ROE of 55.32%, ROCE of 46.72%, and RoNW of 43.41% in FY2026. These metrics are materially higher than all listed peers in the transformer manufacturing segment. The weighted average RoNW of 42.45% over three years demonstrates the consistency of high capital return generation. The low leverage ratio of 0.27:1 (debt to equity) indicates a conservatively funded balance sheet.

Positive 3: Strong Order Book Providing Revenue Visibility

As of June 30, 2026, Raksan Transformers had an order book of Rs. 32,967.92 Lakhs across 83 orders. This order book represents approximately 90.8% of FY2026 annual revenue, providing near-term revenue visibility. The order book consists of confirmed purchase orders for the supply of power and distribution transformers, primarily from government utilities and public sector entities across multiple states.

Positive 4: High Capacity Utilization Validating Demand

The company has demonstrated consistently high and improving capacity utilization rates. Distribution transformer capacity utilization improved from 82.22% in FY2024 to 87.07% in FY2025 and 91.68% in FY2026. Power transformer capacity utilization improved dramatically from 30.58% in FY2024 to 85.68% in FY2025 and 95.18% in FY2026. This high utilization is the primary driver of the planned new manufacturing facility at Liwaspur, Sonepat, which will expand capacity.

Positive 5: Quality Certifications and Regulatory Compliance

Raksan Transformers holds ISO 9001:2015 certification for its quality management systems. Its products carry BIS (Bureau of Indian Standards) marking and BEE (Bureau of Energy Efficiency) STAR ratings, which are mandatory compliance requirements for transformer supply to government utilities and state electricity boards. These certifications serve as meaningful barriers to entry for smaller and less established manufacturers. The company has also registered the "RAKSAN TRANSFORMERS" trademark under Class 9 of the Trademark Act.

Positive 6: Backward Integration and Growing Power Transformer Portfolio

The group company SHR Power Private Limited (formerly Haryana Power Industries) manufactures transformer tanks, providing the company with a degree of backward integration in its supply chain. This helps in cost control and securing reliable supply of critical components. Additionally, the power transformer segment (higher value, higher margin compared to distribution transformers) has grown its revenue contribution from 12.20% in FY2024 to 27.58% in FY2026, improving the overall product mix toward higher-value segments.