ICICI Sec starts coverage on KSH International with 'Buy', sees 45% upside

ICICI Securities expects KSH International's volume, Ebitda, and earnings to grow at a CAGR of 24 per cent, 36 per cent, and 43 per cent, respectively, over FY25-28E

KSH International share price: Domestic brokerage ICICI Securities has initiated coverage on KSH International, a magnet winding wires manufacturer, with a 'Buy' rating, citing surging demand for transformers in domestic and global markets, especially for power transformers.

 

According to the brokerage, India’s leading transformer manufacturers are set to triple their capacity over FY26–28E. This has accelerated demand for specialised conductors, which are central to transformer production. However, supply remains constrained due to manufacturing complexity and lengthy approval processes. KSH International (KSH), a major supplier of transformer conductors to both domestic and global players, is expanding its capacity to 59 kt to cater to the rising demand.

 

 

ICICI Securities expects the company's volume, Ebitda, and earnings to grow at a CAGR of 24 per cent, 36 per cent, and 43 per cent, respectively, over FY25–28E. At the current market price, the stock trades at around 12x FY28E earnings, representing a 40 per cent discount to peers. 

 

The brokerage has set a target price of ₹600, implying an upside of 45 per cent from Wednesday, March 11, closing price of ₹414.85 on the NSE. Around 10:30 AM, shares of KSH were trading at ₹411.50, down 1 per cent. The stock touched an intraday low of ₹405.70 on the NSE. In comparison, the benchmark NSE Nifty 50 was quoting at 23,650 levels, down by 215 points or 0.9 per cent.  

Here's why ICICI Securities is bullish on KSH International:

Rising transformer demand

According to ICICI Securities, demand for high-voltage and HVDC transformers is rising steadily. Nearly all manufacturers are expanding their production capacity, with transformer output expected to triple over the coming years. This surge in capacity is expected to significantly boost demand for specialised, premium conductors.

High entry barriers protect market leaders

Analysts said the transformer market is marked by high manufacturing complexity and significant entry barriers, limiting competition. KSH International remains a leading player in high-voltage transformers and is the only Indian supplier approved for HVDC transformers, having already secured orders in this segment. 

KSH expands capacity

KSH International is leveraging its incumbent position with a home advantage. The company had 19kt transformer capacity in FY25 and has recently added 7kt, with another 11kt under construction. Capacity for round wires is also being expanded to 22kt to meet rising demand, the brokerage said in its note.

Asta IPO highlights global growth potential

According to analysts, Asta Energy Solutions AG (ASTAG), a global manufacturer of specialised transformer conductors, raised 125 million euros through its IPO to fund expansion across Europe, South America, and Asia. The company reported a 43 per cent Ebitda CAGR between CY22–25, grew its order book sixfold in 3.5 years, and saw its stock rise 46 per cent on listing, currently trading at 29x CY25 earnings.  Disclaimer: Views and outlook shared belong to the brokerage/analysts and are not endorsed by Business Standard. Readers' discretion is advised.