KSH International Limited is an established, 45-year-old manufacturer specializing in magnet winding wires, which are indispensable components for coils used across a vast spectrum of electric machines, from large-scale power transformers to compact compressors in air conditioning and refrigeration units. The company holds a significant position in the Indian market as the third-largest manufacturer of winding wires and is recognized as the country's single largest exporter of these products. It operates with a B2B model, serving a diverse base of approximately 120 leading domestic and global Original Equipment Manufacturers (OEMs). The strength of its customer relationships is a core asset, evidenced by the fact that over 90% of its revenue is generated from repeat clients, with some relationships spanning nearly four decades.

The company's business model is "make-to-order," which strategically insulates it from the volatility of commodity markets; the cost of its primary raw material, copper, along with currency exchange rate fluctuations, is a direct pass-through to the customer. This ensures that KSH does not carry exposure to copper price variations. Approximately 75% of the company's revenue is derived from the power transformer sector, serving critical industries like power generation, transmission, distribution, renewables, railways, and data centers. Its leadership in this segment is driven by its core product, the Continuously Transposed Conductor (CTC), a complex, engineered wire that involves a multi-step, precision manufacturing process. KSH was a pioneer in introducing and scaling CTC production in India two decades ago as an import substitute and has maintained its market leadership ever since. This technical expertise is validated by its extensive approvals, including the unique distinction of being the only Indian company approved to supply winding wires for high-voltage direct current (HVDC) 400 kV transformers. While its foundation is in specialized wires, the company strategically expanded into standard round wires in FY '22 to target specific applications like compressors and two-wheeler EV traction motors, aiming for a more balanced product portfolio.

Official Website: https://kshinternational.com/investor-relations/transcripts/

• Record Quarterly Performance: The second quarter of FY '26 was the best in the company's 45-year history across all key financial metrics.

• Revenue Growth: Revenue from operations for Q2 FY '26 stood at INR 712 crores, a substantial increase of 50.7% compared to the same period last year.

• Profitability Surge:

• EBITDA: Reached INR 46.1 crores, marking a 74.2% year-over-year improvement. The EBITDA margin expanded by 90 basis points to approximately 6.5%.

• Net Profit (PAT): Grew by an impressive 128.9% year-over-year to INR 29.6 crores. The PAT margin improved by 140 basis points to 4.1%.

• Unit Economics: The company emphasizes EBITDA per ton as a true measure of profitability, stripping out the pass-through effect of copper prices. This metric increased by 42.1% to INR 65,500 per metric ton in Q2 FY '26, up from INR 46,000 last year.

• Earnings Per Share (EPS): Diluted EPS for the quarter was INR 5.2 per share, reflecting 128.8% growth over the prior year.

• Export Performance: Revenue from exports grew 21.7% year-over-year and constituted 29.5% of total revenue in the quarter.

• Use of IPO Proceeds: The company raised INR 420 crores in fresh proceeds. Of this, INR 225.9 crores has already been used to repay debt, strengthening the balance sheet. Another INR 97 crores is allocated for capital expenditure.

The company delivered a record-breaking quarter with strong top-line growth and a significant expansion in profitability, driven by improved unit economics. Strategic debt repayment from IPO proceeds has fortified its financial position for future growth.

• Dominance in a Niche Product: KSH is the market leader in Continuously Transposed Conductors (CTC), a complex and high-value-added product. This focus on specialized wires, which form ~77% of its revenue, distinguishes it from listed peers who are more concentrated on lower-margin standard wires.

• High Barriers to Entry: The business is protected by significant entry barriers, primarily the lengthy and stringent approval processes from OEMs and power utilities. KSH holds approvals in all 24 countries it exports to and is uniquely qualified in India for the highest-spec HVDC 400 kV transformers, a process that can take a new entrant five to seven years to replicate.

• Risk-Averse Business Model: The "make-to-order" model ensures that raw material (copper) procurement begins only after a customer's purchase order is received. This makes copper price and currency fluctuations a direct pass-through, eliminating commodity price risk from its operations.

• ** entrenched Customer Relationships:** The company's biggest asset is its long-standing relationships with a global customer base. Over 90% of revenue comes from repeat customers, with five of the top ten clients having a tenure of over a decade, providing stable and predictable revenue streams.

• Export Leadership: As India's largest exporter of winding wires, KSH has a geographically diversified revenue base and access to international markets that offer better margins. All exports are directed to transformer companies, leveraging its core expertise globally.

KSH's competitive advantage is built on its leadership in a complex, high-margin product niche, protected by high entry barriers and a de-risked business model. Its deep, long-term customer relationships and strong export focus provide a stable foundation for growth.

• Structural T&D Upcycle: The global Transmission & Distribution (T&D) sector is experiencing a structural, long-term growth cycle.

• Key Demand Drivers: This cycle is fueled by several global megatrends, including the grid integration of renewable energy, modernization of aging power grids, rapid urbanization, and the exponential power demand from AI and data centers.

• Transformer Supply Bottleneck: The primary constraint in the power sector is the supply of power and distribution transformers. This has led to strong order backlogs and capacity expansion plans by all major transformer manufacturers globally, who are KSH's core customers.

• Criticality of Winding Wires: High-quality winding wires are a critical, non-substitutable component for transformers. The expansion of transformer manufacturing capacity directly translates into higher demand for KSH's products.

• EV Market Evolution: In the electric vehicle space, there is a global shift from 400-volt to 800-volt systems to enable faster charging. This technological shift is creating demand for new, advanced winding wires like PEEK-insulated wires.

The company is operating in a favorable demand environment, driven by a global, long-term T&D upcycle and a supply bottleneck in the critical transformer industry. This robust outlook is further supported by emerging technological shifts in the EV sector.

• Core Growth Strategy: The company's strategy is centered on growing volumes in higher value-added segments like T&D, EV motors, and exports; expanding its international footprint with global clients; and increasing its wallet share with existing customers.

• Volume Growth Drivers: In Q2 FY '26, the volume of specialized winding wires grew by nearly 20% year-over-year. This growth was primarily fueled by strong demand from the Power T&D, wind generator, and railway sectors.

• Capacity as a Growth Enabler: The primary driver for future growth is the significant capacity expansion underway. The company is on track to more than double its installed capacity from 29,000 metric tons to 59,045 metric tons by FY '27.

• Operational Efficiencies: Growth in scale is also expected to drive operating efficiencies through better absorption of fixed costs and benefits from backward integration.

KSH's growth is underpinned by a clear strategy to focus on high-value segments, with the recently expanded and planned future capacity serving as the key enabler to capture strong market demand.

• High-Voltage Direct Current (HVDC) Segment: KSH has secured an initial order from BHEL for HVDC transformers, the most profitable product category in its portfolio. As the only approved Indian supplier for 400 kV HVDC systems and with this segment poised for growth, KSH is uniquely positioned to capture this high-value opportunity.

• Export Market Expansion: With new capacity now online, the company can aggressively pursue export markets again after consciously limiting them due to prior capacity constraints. The global expansion by its key transformer clients and a depreciating rupee present significant tailwinds for export growth.

• U.S. Market Penetration: The exit of Chinese competitors from the U.S. market has created a vacuum that KSH is well-positioned to fill. A lack of domestic U.S. capacity means customers are willing to absorb import tariffs, making it a lucrative market.

• Future-Facing EV Technology (PEEK Wires): Through an exclusive licensing agreement for patented PEEK wire technology, KSH is making an early investment to cater to the next generation of 800-volt EV traction motors. While a long-term play expected to materialize post-FY '27, it positions the company at the forefront of this technological shift in India.

The company has multiple, clear opportunities for high-value growth, ranging from immediate gains in the HVDC and export markets to a strategic, long-term position in the evolving EV ecosystem.

• Current Installed Capacity: Following the commissioning of Phase I of the Supa plant, the company's total installed capacity has increased from 29,000 to 41,045 metric tons per annum (MTPA).

• Supa Plant Phase I: The new 12,000 MTPA capacity at the Supa facility became available for production from October 1, 2025.

• Future Capacity Expansion (Phase II): The company plans to further increase its capacity to 59,045 MTPA by FY '27, more than doubling its size in a few years.

• Capex Allocation: INR 97 crores from the IPO proceeds is earmarked for capital expenditure at the Supa and Chakan plants. Orders for machinery have been placed, with a primary focus on accelerating the ramp-up of CTC capacity to meet strong market demand.

• Utilization Ramp-Up: A new facility typically takes two to three years to reach an optimal utilization rate of 85%. The new Supa plant is already operational and has started contributing to production.

KSH has successfully executed the first phase of a major capacity expansion, with a clear roadmap and funding to more than double its capacity by FY '27 to meet robust demand.

• Strategic Portfolio Balancing: The company plans to build a more diversified and balanced portfolio by making long-term investments in specialized wires for EV motors and select standard wire applications.

• Indigenization of EV Technology: A key future plan is to establish manufacturing lines to indigenize patented PEEK wire technology for the Indian market. This is a forward-looking investment to capture the impending shift to 800-volt EV systems, with meaningful volumes expected after FY '27.

• Working Capital Optimization: Management is actively focused on improving its cash conversion cycle. A key initiative is to shift its copper procurement from 100% advance payment to credit terms, which will increase payable days and reduce the overall working capital requirement.

The company's future plans involve strategically diversifying its product portfolio for long-term stability and making early investments in next-generation EV technology. Concurrently, it is focused on improving balance sheet efficiency through active working capital management.

• Key Profitability Metric: The company's core profitability metric is EBITDA per ton, which rose to INR 65,500 in Q2 FY '26. This metric is independent of volatile copper prices, which are a pass-through.

• Drivers of Margin Expansion: The significant improvement in EBITDA per ton is attributed to three key factors:

1. Favorable Product Mix: A higher share of sales from complex, high-value products for large kV transformers (765 kV and HVDC).

2. Higher Export Contribution: Exports command better margins compared to the domestic market.

3. Operating Leverage: Increased production volumes lead to better absorption of fixed costs, enhancing overall efficiency.

• Specialized vs. Standard Wire Profitability: There is a significant profitability difference between product categories. The EBITDA per ton for specialized winding wires is approximately three times higher than that of standard wires (a 3:1 ratio).

• Margin Outlook: The management's stated endeavor is to sustain the current elevated levels of EBITDA per ton going forward, supported by strong demand for high-value products.

The company's margins have expanded significantly due to a strategic focus on high-value products and export markets, and it aims to maintain this improved profitability profile. The stark difference in profitability between specialized and standard wires highlights the success of its niche focus.

• Differentiation Through Specialization: KSH's primary competitive advantage lies in its product mix. While peers focus heavily on standard wires, KSH derives ~75% of its business from high-margin specialized wires, which is the main reason for its superior EBITDA per ton.

• Niche Market with Few Players: In the most complex and profitable segments, such as CTC for 765 kV and HVDC transformers, the number of approved competitors is very small, creating a favorable competitive landscape at the high end of the market.

• Global Competitive Landscape: KSH competes effectively with Chinese manufacturers in markets like Europe, the Middle East, and Japan. It has benefited from the "China Plus One" strategy and the withdrawal of Chinese players from the U.S. market, where it now faces less competition.

• Low Threat from Imports: While some CTC is being imported into India to meet demand, it comes at a significantly higher cost (at least a 10% import duty). With KSH's new domestic capacity now online, the threat from imports is expected to diminish.

KSH effectively mitigates competition by focusing on a specialized, high-margin niche where few players operate and by capitalizing on geopolitical shifts that have opened up key export markets.

• Customer Backward Integration: A key customer is investing in captive CTC manufacturing. Management views this as a limited risk, citing the high complexity, significant scale required for viability, and the fact that this is not a prevalent trend among global transformer manufacturers.

• High Working Capital: The company's working capital cycle of ~75 days is higher than its peers, primarily due to low payable days from purchasing copper on advance. This can strain cash flow, especially during periods of high growth, but management is actively taking steps to improve this by negotiating credit terms with suppliers.

• Client Concentration: The top 10 customers contribute approximately 50% of revenue. This risk is mitigated by the long-term, multi-decade nature of these relationships, high repeat business rates, and good diversification within the top client list.

The company faces manageable risks related to potential customer integration and high working capital, with clear mitigating factors and management actions in place.

• Management Transition: Mr. Rohit Hegde, the Joint Managing Director, will transition from an executive role to a Non-Executive Director on the board. This change is to allow him to take on a more active role in other group companies.

• Raw Material Sourcing Security: The company maintains robust, long-term relationships with multiple copper suppliers, both domestic and international. With domestic copper producers also expanding their capacity, KSH does not anticipate any challenges in sourcing its primary raw material. It typically holds 15-20 days of raw material inventory.

A planned management transition is underway with continuity on the board, while raw material supply chains remain secure and well-managed.