Karamtara Engineering files draft papers to raise Rs 1,750 cr via IPO, likely valuation at over Rs 10,000 cr

Karamtara Engineering IPO

Solar mounting structures and tracker components manufacturer Karamtara Engineering has filed preliminary papers with SEBI as it plans to raise Rs 1,750 crore via initial public offering to reduce debt burden.

The IPO will consist of fresh issuance of equity shares worth Rs 1,350 crore, and an offer-for-sale of Rs 400 crore by existing shareholders. Promoters - Tanveer Singh, and Rajiv Singh - will be selling Rs 200 crore worth shares each in the offer-for-sale.

Karamtara Engineering is a backward integrated manufacturer of products for renewable energy and transmission lines sectors, with a total installed capacity of 5.67 lakh MTPA and 4.8 lakh pieces as of September 2024.

The company, which may be seeking a valuation of Rs 10,411 crore post issue, offers structures and fasteners in the solar energy and transmission sectors, and overhead transmission line hardware fittings and accessories. It is also foraying into the wind energy sector by setting up manufacturing facility to produce tubular towers for wind turbines, which is expected to commence operations in the first quarter of FY26.

It claims to have built a strong customer base on the international front, including original equipment manufacturers (OEMs) and engineering, procurement and construction (EPC) companies and independent power producers (IPPs), with exports business contributing 57.56 percent to its total revenue in FY24.

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Promoters hold 94.79 percent stake in Karamtara Engineering, and the remainder 5.21 percent shares are owned by public shareholders.

The Mumbai-based company, which competes with listed entities like Inox Wind, KP Green Engineering, Premier Energies, Waaree Energies, and Suzlon Energy, has raised Rs 307.17 crore via preferential allotment of 98.08 lakh shares to several investors at a price of Rs 310 per share on January 10, 2025.

Marquee names like Jagdish Naresh Master, Utpal Hemendra Sheth, Singularity Growth Opportunities Fund, Gaurav Trehan, Quantum State Investment Fund, Ananta Capital Venture Fund, Jaidev Rajnikant Shroff, Axia Select Opportunities Fund, Mithun Padam Sacheti and Siddhartha Sacheti, and MNI Ventures invested in the company via preferential allotment.

Karamtara Engineering intends to reduce its debt burden significantly as it plans to utilise Rs 1,050 crore out of fresh issue proceeds for repaying debt, and the remainder funds for general corporate purposes. As of November 2024, its total outstanding borrowings from banks and lending institutions of Rs 586.4 crore and outstanding acceptances pursuant to letters of credit amounting to Rs 733.6 crore.

The financial performance remained strong in the past years with profit in the fiscal 2024 growing 142.3 percent to Rs 102.7 crore and revenue increasing 51.5 percent to Rs 2,425.2 crore compared to previous fiscal. Profit in six months period ended September 2024 rose by 51.6 percent to Rs 59 crore and revenue grew by 34.2 percent to Rs 1,413.1 crore compared to year-ago period.

JM Financial, ICICI Securities, and IIFL Capital Services are appointed as the book running lead managers to the issue.