Abstract: Dhoot Transmission, which opened its IPO in the present day, has a dominant place in two- and three-wheeler wiring harnesses, with electrification providing one other leg of progress. However shrinking margins, weak free money stream and a valuation of almost 45 occasions earnings go away little room for disappointment.
For these of you who personal or typically take two- or three-wheelers (autorickshaws, e-rickshaws) to get across the metropolis, there’s largely a single firm that makes their harnesses: Dhoot Transmission.
Right now, two out of each 5 two- and three-wheelers in India have a Dhoot Transmission harness. Lengthen this to the EV area and the determine will get larger: nearer to seven in 10. This near-monopoly sits in entrance of a market anticipated to double by FY31.
On the higher finish of the IPO value band (Rs 871), traders are requested to pay 45 occasions final yr’s revenue. The query just isn’t whether or not Dhoot Transmission is an efficient enterprise, however whether or not a market chief’s value is correct for one rising quick and incomes much less on each rupee of it.
In regards to the firm
Dhoot Transmission makes wiring harnesses, the bundles of cable and connectors carrying energy and indicators round a car, and is amongst India’s prime two suppliers for two- and three-wheelers, with 41 per cent of that market by worth and near 70 per cent of the electrical model.
Its stickiness is bodily, not contractual: every harness is constructed to the automaker’s personal design, on tooling the shopper owns and retains inside Dhoot’s vegetation, with each half accredited by way of a course of that’s gradual and dear to recreate elsewhere.
The corporate boasts robust shopper retention, with its prime 5 prospects having stayed 13 years on common.
Wiring harnesses had been 77 per cent of FY26 income, the remaining battery packs, sensors, controllers and switches. Two-wheelers gave 65 per cent of income and three-wheelers 13 per cent, with purchasers together with Bajaj Auto, TVS Motor and Honda Bike and Scooter India; over 90 per cent of gross sales are home.
What Dhoot will get proper
The wiring itself is getting extra helpful: a digital show, anti-lock brakes and digital gasoline injection every add their very own circuit. Dhoot already attracts 57 per cent of two-wheeler income from premium and electrical platforms, a section forecast to develop 6-9 per cent a yr in opposition to 4-6 per cent for petrol bikes total.
The debt goes away too. Debt-to-equity has already halved to 0.4, and Rs 767 crore of the contemporary concern, roughly half of consolidated debt as of July 2026, will repay borrowings on the firm and three subsidiaries. Most of final yr’s Rs 91 crore finance price ought to now drop to the underside line.
Electrification raises the value of the identical sale: an electrical two-wheeler wants 1.5 to 2.5 occasions the harness content material of a petroleum one, from high-voltage cables, battery interconnects and charger hyperlinks. CRISIL expects electrical penetration in two-wheelers to climb from 6.6 per cent in FY26 to 25-30 per cent by FY31, doubling the home harness market to about Rs 12,000 crore in 5 years, of which Dhoot already holds near 70 per cent, a tailwind needing no additional car offered.
The place Dhoot is lagging
There isn’t any contract below the income: Dhoot operates on rolling buy orders with no minimal quantity ensures, a volume-linked enterprise that goes unnoticed whereas the market is powerful. If two-wheeler gross sales stall, income drops with the broader auto cycle, whereas the mounted prices of operating 22 vegetation keep precisely the place they’re.
Margins are compressing too. Dhoot is rising volumes aggressively whereas incomes much less on each unit, with working margins down from 15.6 per cent in FY24 to 12.6 per cent in FY26. It buys copper and polymers with no long-term value safety, whereas automakers demand annual value cuts.
Progress is consuming its personal money. Over the past three years, Dhoot generated Rs 909 crore from operations however spent Rs 985 crore on capex, leaving free money stream destructive at Rs 76 crore; FY26 lastly turned optimistic, however solely barely, at Rs 20 crore. Extra spending is deliberate, together with new vegetation and a pending Rs 435 crore acquisition, and till it tapers, the revenue within the desk just isn’t but money within the enterprise.
Dhoot Transmission IPO particulars
| Particulars | Particulars |
| Whole IPO measurement (Rs cr) | 3,067 |
| Provide on the market (Rs cr) | 1,667 |
| Recent concern (Rs cr) | 1,400 |
| Worth band (Rs) | 829-871 |
| Subscription dates | August 10-12, 2026 |
| Function of concern | Rs 465 crore debt reimbursement, Rs 302 crore subsidiary funding, Rs 150 crore new plant, relaxation common company functions |
Publish-IPO
| Market cap (Rs cr) | 17,816 |
| Internet value (Rs cr) | 3,834 |
| Promoter holding (%) | 68.8 |
| P/E (occasions) | 44.9 |
| P/B (occasions) | 4.6 |
Monetary historical past
| Key financials | 2Y CAGR (%) | FY26 | FY25 | FY24 |
|---|---|---|---|---|
| Income (Rs cr) | 27.2 | 4,525 | 3,445 | 2,798 |
| EBIT (Rs cr) | 14.1 | 568 | 498 | 436 |
| PAT (Rs cr) | 15.2 | 397 | 354 | 299 |
| Internet value (Rs cr) | – | 2,434 | 994 | 748 |
| Whole debt (Rs cr) | – | 918 | 815 | 576 |
Key ratios
| Key ratios | 3Y common (%) | FY26 | FY25 | FY24 |
|---|---|---|---|---|
| ROE (%) | 34.6 | 23.1 | 40.6 | 39.9 |
| ROCE (%) | 28.9 | 22 | 31.8 | 32.9 |
| EBIT margin (%) | – | 12.6 | 14.4 | 15.6 |
| Debt-to-equity (occasions) | – | 0.4 | 0.8 | 0.8 |
Our verdict
Dhoot Transmission is an efficient enterprise: a dominant place, a wider margin than friends and the sector’s tailwinds behind it, deserving of a premium.
The premium’s measurement is the place the doubt lies. On the higher band, it’s asking for 45 occasions earnings, not low-cost by any studying, from an organization but to fund a single yr of its personal growth.
The comparability that issues is Motherson Sumi Wiring, at 43 occasions. On high quality, it’s the higher enterprise: 39 per cent return on capital employed in opposition to Dhoot’s 22 per cent, virtually no web debt and ample free money. Dhoot wins on FY26 income progress, 31 per cent in opposition to 23 per cent and on margin, 12.6 per cent in opposition to 7.4 per cent.
So that you pay a shade extra for the better-run steadiness sheet, progress and margin each below strain, betting that electrification lifts content material sooner than prospects claw again value, and that spending stops earlier than returns fall once more. Dhoot has the place to make that occur, however at 45 occasions, the value leaves nothing for the yr it doesn’t. Three issues will present which method it goes: the working margin holding fairly than stepping down once more, free money stream staying optimistic as soon as new vegetation are paid for, and Indian two-wheeler manufacturing holding its tempo, since each acquire in content material per car rests on that base.
Additionally learn: How to win the IPO game: IPO handbook
