Dhoot Transmission IPO

Dhoot Transmission is one of the leading players in India, with a 41.03% market share in two-wheeler and three-wheeler wiring harnesses. In the electric vehicle (EV) segment, it is the clear market leader with nearly a 70% share. This strong presence gives the company a clear competitive advantage and helps build trust with customers.

The company generates strong returns from the money invested in its business. Excluding ₹1,022.56 crore of unused cash from a recent share issue, its return on equity (ROE, the profit earned on shareholders' money) stood at 28.10%, while its return on capital employed (ROCE, the return generated from the total capital used in the business) was 27.83% in FY26. This reflects efficient use of capital.

The company has a strong financial position, with ₹1,084.28 crore in cash and cash equivalents in FY26. This is higher than its total borrowings and lease liabilities, resulting in negative net debt of ₹177.56 crore. In simple words, it has more cash than debt, giving it financial flexibility.

The company's revenue from operations grew by 31.35% in FY26 to ₹4,524.96 crore, up from ₹3,444.86 crore in FY25. This steady growth shows its ability to increase production, win more business, and expand its product offerings.

Dhoot Transmission has built a strong presence in the fast-growing electric vehicle market. In FY26, it earned ₹1,093.56 crore from EV-related products, which made up 24.17% of its total revenue. As EV adoption continues to grow, this gives the company a solid opportunity to expand further.

The company designs and manufactures key components such as terminals, connectors, and cables on its own instead of relying heavily on outside suppliers. This helps reduce procurement costs, maintain better quality control, and protect its profit margins.

The company relies heavily on a small group of customers for its revenue. In FY26, its top ten customers contributed 80.93% of total revenue, while its largest customer, Bajaj Auto, alone accounted for 31.84% (₹1,440.83 crore). If it loses any of these major customers or receives fewer orders from them, its revenue could be affected significantly.

Around 65.47% of the company's FY26 revenue came from the Indian two-wheeler segment, contributing ₹2,962.70 crore. This means its performance is closely tied to the health of the two-wheeler market. Any slowdown in demand, regulatory changes, or industry challenges could impact its business.

Expanding and maintaining manufacturing facilities requires significant investment. In FY26, the company spent ₹328.18 crore on net capital expenditure (capex, or money spent on building and upgrading long-term assets). Such high investments can reduce free cash flow (cash left after business expenses and investments) and may increase the need for external funding.

The company's net working capital cycle increased from 12 days in FY25 to 102 days in FY26. Higher inventory levels (76 days) and receivables (money yet to be collected from customers) of 64 days kept more cash tied up in the business. This can increase short-term borrowing needs and put pressure on liquidity.

Wiring harnesses continue to be the company's biggest revenue driver, contributing 77.08% (₹3,487.72 crore) of total revenue in FY26. If demand for these products declines, prices come under pressure, or newer technologies reduce their importance, the company's financial performance could be affected.

As of FY26, 50.52% of the company's wiring harness production capacity and all of its other product manufacturing capacity were located in Maharashtra. This concentration increases the risk of disruptions from events such as labour issues, power outages, or natural disasters, which could affect production and the overall supply chain.