JOHNSONCAB ELECTRICALS LIMITED IPO

IPO Overview

Johnsoncab Electricals is raising about Rs 53.22 crore to Rs 56.02 crore at Rs 190-200 a share, entirely through new shares to expand capacity and fund working capital. Promoters sell nothing, but their stake still falls from 98.60% to 72.48% on the new shares. The issue will list on the BSE SME platform, where trading is usually thinner than on the main board.

Use of Funds

The entire issue is new shares, so all net proceeds go to the company. No money goes to selling shareholders as there is no offer for sale.

• Rs 8.46 crore for an additional factory shed for expansion
• Rs 9.38 crore for plant and machinery to raise wires and cables capacity
• Rs 7.33 crore for machinery to make paper-insulated copper and aluminium conductors
• Rs 3.23 crore for a rooftop solar power plant
• Rs 14.00 crore for additional working capital
• Balance for general corporate purposes, amount not disclosed

Makes low-voltage wires that carry power the last mile

Johnsoncab, sold as JOHNSON CABLES, makes wires and cables rated up to 1.1 kV, or 1,100 volts. That is the building, farm, factory and solar-farm world, not high-voltage transmission towers.

It buys copper and aluminium rods, plastic compounds, steel strips and drums, draws metal into thin wires, twists them for strength, coats them with insulation, armours them where needed, tests them and packs them in coils or wooden drums. It gets paid when it sells cable plus a little scrap. There is no subscription or annuity. One purchase order comes in, cable goes out, usually within one to two months.

It runs two leased plants at Mehsana in Gujarat. Unit-I has operated since 2012. Unit-II started in 2024 and drove much of the recent growth. A small depot in Karnataka supports southern dispatches.

Sells housing wires, power cables and solar cables under one brand

The company reports a single business, low-voltage wires and cables, but the mix has shifted sharply toward housing wires.

Housing and building wires are flexible copper wires for homes, offices, hospitals and schools. Power cables are thicker aluminium or copper cables for distribution networks, plants and underground systems. Solar cables carry direct current from panels to inverters. Submersible flat cables go into borewell pumps. Control cables wire up panels and machines. Welding cables are a small line for welding sets. The rest is scrap and traded raw material.

The mix in revenue shows the swing:

Five-month stub ended 31 August 2026, not a full year.

Volumes tell the same story in kilometres. Housing-wire kilometres rose from 8,530.5 to 13,490.9 over two years, solar from 2,402.3 to 5,635.1, power cables from 2,834.1 to 3,529.6, while submersible fell then steadied. The stub cannot be compared with full years, but housing wires dominated it.

Distributors, contractors and government tenders place most orders

The buyer is rarely a household. It is a distributor who stocks and resells, a contractor who wires a utility network or solar farm, or a railway, utility or department that buys through tenders.

That makes demand lumpy and specification-driven. The right conductor, insulation and standard, delivered on time, wins. Price matters because copper, aluminium and polymers move fast and tenders are competitive.

The end-use split moves with tender wins:

• Distributors were 45.17% of revenue in FY2024, then 35.03% and 24.33% in FY2026.
• Renewable energy was 20.41%, 16.63% and 23.24%.
• Railways was 5.56%, 18.52% and 18.88%.
• Construction was 8.41%, 2.95% and 17.27%, then 26.37% in the stub.
• Agriculture fell from 14.96% to 4.09%.

Customer counts churn even when sales grow. The company closed FY2024 with 493 buyers, added 255 and lost 224 to end FY2025 with 524, then added 199 and lost 263 to end FY2026 with 460. Average order value, repeat rate and acquisition cost are not disclosed.

Concentration has risen. The top 10 buyers were 28.18% of revenue in FY2024, 51.87% in FY2025 and 66.24% in FY2026. The top three alone were 45.41% in FY2026. Government and railway work drove that jump, which is why tender timing matters so much.

Gujarat pays most bills and exports are tiny

Sales are overwhelmingly domestic and centred on the home state.

Five-month stub.

Rajasthan, West Bengal, Andhra Pradesh, Karnataka and Uttar Pradesh contribute the rest in varying order each year. Exports were Rs 22.31 lakhs to the Philippines in FY2025 and Rs 62.98 lakhs to Uganda in FY2026. Sweden is named as a past market but shows no sales in those years.

Factories run fairly full, so growth needs new sheds

Installed capacity and output decide how much cable can be sold. Capacity is measured in kilometres.

Stub capacity pro-rated from annual 79,950 KMs.

Unit-I, at 70,000 KMs annual capacity in FY2026, ran at 81.43% and has little slack. Unit-II, at 9,950 KMs, ran at 66.92% after a strong FY2025. The IPO would add 1,67,580 KMs at Unit-II, more than twice the current base, plus a small paper-insulated conductor line for transformers and motors and rooftop solar to cut power bills.

What decides growth is therefore simple: enough tender and distributor orders to fill kilometres, at prices that cover copper and polymers, and fast enough collection to fund the next lot of raw material.

Five-month stub ended 31 August 2026, not annualised and not comparable with full years.

Sales rose about 58% then about 51% over two full years, margins widened each year, and returns on equity stayed very high as a thin equity base carried fast growth. Leverage fell but stayed high, and the stub stayed profitable with a higher margin on a different mix.

What the financials tell us

Profit has grown fast on real volume, but cash has not followed. Sales rest on a few buyers and one state, and the next leg needs a very large plant to be filled and paid for.

More cable made and sold lifted sales and margins

Revenue grew because the company produced and sold much more cable. Production rose from 25,250 KMs to 36,090 KMs to 63,659 KMs as Unit-II ran for a full year in FY2026. Unit-II alone was about 30% of sales that year, and railway sales rose from about Rs 4.91 crore to about Rs 39.73 crore over the period.

At the same time, reported cost of goods sold took a smaller share of sales, falling from 90.50% to 88.25% to 85.12%. The document attributes about Rs 3.15 crore of profit improvement in FY2025 and about Rs 6.59 crore in FY2026 to that shift. Fuller factories spread fixed costs, and management attributes improved profitability partly to a shift toward value-added products such as welding, submersible and solar cables.

That is operating leverage working as it should. The caveat is that the saving is not split into price, mix and efficiency, so an investor cannot tell how much would reverse if copper spikes or tenders tilt back to low-margin power cables.

Factories are already fairly full and the new build is more than twice the size

Combined use rose from 73.19% to 79.62%, with the older Unit-I at 81.43% in FY2026. There is little room to grow without new lines.

The IPO funds most of a Rs 30.10 crore build that would add 1,67,580 KMs of wire and cable capacity at Unit-II, plus a 47.25-tonne paper-insulated conductor line and solar plants that should cover most of last year's power use. Against 79,950 KMs today, that is more than a doubling.

Money spent now only becomes sales after trial runs and commissioning. The main wire-and-cable expansion is scheduled for trial runs and commissioning in March-April 2027 and commercial production in April 2027; the paper-insulated conductor line is scheduled to start commercial production in February-March 2027. Until the new lines run busy, the company carries the cost without the revenue. The bet needs matching order flow from distributors, railways, utilities and solar developers.

Profit is locked in stock and dues, so debt funds the growth

Profit before tax rose from about Rs 3.30 crore to about Rs 7.38 crore to about Rs 17.94 crore over three full years, yet cash from operations was negative in all three years. In FY2026 alone, stock absorbed about Rs 26.54 crore and customer dues absorbed about Rs 16.03 crore, dwarfing the lift from higher payables.

Stock and receivables dominate the balance sheet. At the end of August 2026, inventories were about Rs 65.46 crore and receivables about Rs 26.81 crore against payables of only about Rs 9.08 crore. Suppliers must be paid quickly, many under small-enterprise rules, while railways and government buyers pay slowly. Every extra rupee of sales therefore needs more bank funding until collection improves.

The gap was met with cash credit topped up by promoter loans, leaving total borrowing at about Rs 77.57 crore against net worth of about Rs 40.08 crore. The five months to August 2026 generated about Rs 7.65 crore of net operating cash flow, helped by a net release of about Rs 10.55 crore from trade receivables even as stock built further. One short period does not prove the full-year strain is over.

Sales rest on a few buyers, railways and Gujarat — and the last five months look different

By FY2026 the top 10 buyers were about two-thirds of sales, railways and public-sector buyers each about 19%, and Gujarat about 71%. A pause in tenders or that region would hurt quickly.

The five-month stub looks very different. On revenue of about Rs 113.04 crore, railways were only about Rs 57 lakhs and public-sector sales only about Rs 63 lakhs, while Gujarat rose to about 76% and housing wires jumped to about 45% of sales. The company has not said why.

A five-month stub cannot be compared directly with a full year. The prospectus risk section describes seasonal demand and a historically stronger final quarter from government projects, although its later management discussion says the business is not seasonal. An investor should not read the stub as a new trend, but the swing shows how sensitive this revenue base is to tender timing.

The plants and loans depend on the promoters staying supportive

Both factories and the registered office sit on promoter-leased land, for 10 years to December 2035 with a renewal right. Bank loans are backed by promoter personal guarantees and promoter property, and promoter-family unsecured loans of about Rs 11.56 crore can be recalled at any time.

That is about 15% of total borrowing, but the wider dependence matters more than the amount. A recall, guarantee withdrawal or lease problem would hit cash and continuity directly, separate from how the cable business performs. The IPO does not repay debt, so this support stays in place after listing.

At Rs 200, the top of the band, the IPO values the company at about 15.8 times its FY2026 profit on post-issue shares — the right lens for a profitable maker with no subsidiaries. That sits below the 18.14 times peer median, but at a clear premium to JD Cables, which is larger, higher-margin and barely levered. The discount looks optical rather than earned, given negative cash conversion, heavy leverage and concentrated orders. The price looks fair only if collections stay strong and new capacity fills quickly without more debt.

Basis: subject post-issue P/E on FY2026 reported profit; peer P/Es are those shown in the prospectus for closing prices on 23 Oct 2026. Its company-by-company table labels the peer figures standalone, while the preceding methodology note says consolidated.

All four are small low-voltage cable makers that grew fast off a small base. JD more than tripled sales over two years and is the largest at about Rs 364.59 crore, while Johnsoncab is the smallest at about Rs 210.47 crore. JD also runs fullest at 84.10% use with the highest EBITDA and net margins, while Johnsoncab sits in the middle on margins and leads on return on capital employed at 39.68%.

The differences that matter are balance sheet and breadth. Johnsoncab ended FY2026 at 2.54 times debt to equity against 0.39 to 1.73 times for peers, with three years of negative operating cash flow while peers deleveraged. Its sales are also concentrated, with two-thirds going to 10 buyers and over 70% in Gujarat, and the stub showed how quickly railway and public-sector shares can fall. Susan earns a higher return on equity with lower leverage, and JD trades cheaper despite better margins and fuller use. The asking multiple is therefore riskier than the median discount suggests.

Approvals and a patent help win tenders, but scale does not protect it

What genuinely sets Johnsoncab apart is qualification, not cost. It holds an Indian patent to 2042 for a double-insulated flat cable for submersible pumps, which blocks exact copies in that niche and signals in-house design. More important day to day are vendor approvals with Western Railway, Gujarat and Rajasthan utilities and transport bodies, plus ISO and BIS licences. Those gates let it bid where new entrants cannot, and past execution helps keep them.

That edge is narrow. Approvals must be renewed and tenders are still won on price and delivery. At 79,950 KMs, scale is modest next to organised leaders like Polycab and KEI, and new well-funded entrants are adding Gujarat capacity. High returns in FY2026 came from fuller use of new plant, which rivals can match with their own capex and utilisation.

Tailwinds help if orders flow. India wires and cables is seen growing from about USD 1,000 crore in 2025 to about USD 1,700 crore by 2032, solar build needs specialised direct-current and earthing cables, and distribution reform and new transmission lines pull power cables through tenders it can contest. None of that turns into cash unless working capital and customer breadth improve alongside the Unit-II expansion.

• Few buyers decide the year. Top 10 buyers were two-thirds of FY2026 sales and top three were 45%. Losing one railway, renewable or construction order, or a tender delay, can swing revenue and profit sharply. This is company-specific and has worsened as concentration rose.

• One state decides most sales. Gujarat was about 71% of FY2026 sales and higher in the stub. A local slowdown, price war or policy shift hits most of the book at once.

• Debt funds growth and stays after the IPO. About Rs 77.57 crore of borrowing stood against net worth at 1.94 times equity in August, with no IPO money earmarked to repay it. Interest and rollover risk leave little buffer if earnings dip. Peers carry far less leverage.

• Cash stays locked in stock and dues. Net working-capital days were 111 in FY2026 and 122 in the stub, with three full years of negative operating cash flow. Growth needs more cash credit and recallable promoter loans until stock turns and buyers pay faster. This is more acute here than the peer leverage path suggests.

• Copper, aluminium and polymer prices can squeeze margins. Reported cost of goods sold was still about 83% of sales in the stub. The company generally passes rises on, but not always or at once, and competitive tenders limit room. This is industry-wide, but hits a levered, concentrated maker harder.

• Promoter support underpins sites and loans. Factories sit on promoter land, loans rest on promoter guarantees and property, and Rs 11.56 crore of family loans can be recalled any time. Add bank guarantees and past filing delays, and governance is tighter to the promoter family than at larger peers.

Volume-led margin gains on fuller factories are real, but profit is funded by debt, sales hinge on a few tender buyers in Gujarat, and the IPO funds a more-than-doubling of capacity whose main wire-and-cable expansion is scheduled to start commercial production in April 2027. At about 15.8 times FY2026 profit, the multiple is below the 18.14-times peer median but above JD Cables at 11.56 times, despite JD being larger, fuller-utilised and less levered. The thesis needs housing-wire and tender orders to fill new lines while collections shorten working-capital days; if tenders pause, input prices spike or stock keeps absorbing cash, leverage and concentration would break it.