Dhoot Transmission IPO enters the second day of bidding on Tuesday, with the grey market signalling a potential listing gain of nearly 29%. The IPO’s latest grey market premium, or GMP, stands at Rs 250 against the upper price band of Rs 871, indicating an estimated listing price of around Rs 1,121 if the premium holds.
The Rs 3,066.89 crore and will close on August 12. The price band has been fixed at Rs 829-871 per share, while the lot size is 17 shares. At the upper price band, a retail investor needs Rs 14,807 to apply for one lot.
The issue comprises a fresh issue of Rs 1,400 crore and an offer for sale of Rs 1,666.89 crore. The shares are proposed to be listed on NSE and BSE on August 17.
Importantly, the 29% figure is the GMP-implied potential listing gain and not an actual market return, as the shares have not yet listed.
The latest GMP for Dhoot Transmission IPO is Rs 250.
Adding this to the upper IPO price of Rs 871 gives an estimated listing price of Rs 1,121. This implies a potential gain of around 28.7% over the IPO price.
The grey market premium has remained strong during the IPO period. It was Rs 253 on August 4, rose to Rs 259 on August 6, slipped to Rs 247 on August 7 and stood at Rs 259 on August 8. It is currently at Rs 250.
This suggests that the unofficial market continues to expect Dhoot Transmission to list at a premium to its issue price.
However, GMP is not an official price indicator and can change before the actual listing. The eventual listing price could therefore be different from the GMP-implied level.
The IPO was subscribed 0.62 times on the first day of bidding.
The retail portion was subscribed 0.76 times, while the non-institutional investor category was subscribed 1.02 times.
The qualified institutional buyer portion, excluding anchor investors, was subscribed only 0.06 times by the end of Day 1.
With two days of bidding remaining, investors will be watching whether institutional demand improves before the issue closes on August 12.
The GMP is clearly the biggest attraction for investors looking at Dhoot Transmission from a listing-gain perspective.
At Rs 250, the current GMP indicates an estimated listing price of Rs 1,121 against the IPO’s upper price of Rs 871. That translates into a potential gain of around 28.7%.
But investors should not treat the GMP as a guaranteed return.
The more important question is whether Dhoot Transmission’s business and valuation make the IPO attractive even beyond the expected listing.
On that front, the research reports shared for the IPO are broadly positive, with Anand Rathi, Swastika Investmart, Choice Securities and Ventura Securities recommending subscription, particularly with a long-term investment view.
Dhoot Transmission is an automotive electrical and electronics company that designs and manufactures wiring harnesses and electrical distribution systems.
Its products include wiring harnesses, battery packs, sensors, electronic controllers, automotive switches, terminals, connectors and other electrical systems. The company supplies these products to both internal combustion engine and electric vehicle platforms.
Wiring harnesses remain the company’s largest business, accounting for around 77.1% of revenue in FY26.
The company has a strong position in the two-wheeler and three-wheeler wiring harness market. It had a combined market share of around 41% in these segments in FY26. Its position is even stronger in electric two-wheelers and three-wheelers, where it had a market share of close to 70%.
This makes Dhoot Transmission a way for investors to gain exposure to the growing use of electrical and electronic components in vehicles.
Electric vehicles are an important growth driver for the company.
EV-related revenue increased from 16.2% of total revenue in FY24 to 24.2% in FY26, according to the research reports. Around 95% of the company’s automotive product portfolio is either EV-focused or powertrain-neutral, meaning it can be used across ICE, hybrid and electric vehicle platforms.
The shift towards EVs also increases the amount of electrical and electronic content required in vehicles.
Anand Rathi noted that wiring harness content in a two-wheeler EV can be around 1.5 to 2.5 times that of an ICE two-wheeler. The brokerage expects increasing electrification, premiumisation, safety features and connectivity to support higher content per vehicle.
Dhoot Transmission is also expanding into areas such as battery pack interconnect systems, high-voltage wiring, DC-DC converters, on-board chargers and battery junction box systems.
The company has reported strong revenue growth.
Revenue from operations increased from Rs 2,797.7 crore in FY24 to Rs 3,444.9 crore in FY25 and Rs 4,525 crore in FY26. That represents a 31.4% increase in FY26.
EBITDA increased from Rs 512.4 crore in FY24 to Rs 591 crore in FY25 and Rs 711 crore in FY26.
Profit after tax rose from Rs 298.7 crore in FY24 to Rs 353.9 crore in FY25 and Rs 396.8 crore in FY26.
However, there is an important point investors need to keep in mind: profitability margins have declined even as revenue and profit have grown.
EBITDA margin fell from 18.3% in FY24 to 17.2% in FY25 and 15.7% in FY26. PAT margin also declined from 10.7% to 8.8% during the period.
Of the Rs 1,400 crore fresh issue, a substantial portion will be used to reduce debt.
The company plans to use around Rs 464.8 crore towards repayment or prepayment of its borrowings. Another Rs 301.8 crore will be invested in subsidiaries to help repay their outstanding debt.
Dhoot Transmission has also earmarked Rs 150 crore for establishing two new wiring harness manufacturing plants in Haryana and Tamil Nadu. These facilities are expected to add around 3.06 million units of annual capacity.
The remaining proceeds will be used for potential acquisitions and general corporate purposes.
At the upper price band of Rs 871, Dhoot Transmission was valued at around 44.9 times FY26 earnings, according to the research reports. The company’s post-issue market capitalisation was estimated at around Rs 17,816 crore.
The valuation is not particularly low, but brokerages have generally considered it reasonable given the company’s market position, growth and exposure to EVs.
Choice Securities also calculated the valuation at around 44.9 times FY26 earnings and compared Dhoot Transmission with companies such as Uno Minda, Motherson Sumi Wiring India, Varroc Engineering, Minda Corporation and Sona BLW Precision Forgings.
Swastika’s peer comparison showed Dhoot Transmission’s P/E at 41.36 times, compared with 46.49 times for Minda Corporation, 56.87 times for Uno Minda, 43.24 times for Motherson Sumi Wiring India and 74.64 times for Sona BLW Precision Forgings.
The biggest concern highlighted by the research reports is customer concentration.
Dhoot Transmission’s top five customers contributed 71.6% of revenue in FY26, while its top 10 customers accounted for around 81%.
Bajaj Auto alone contributed 31.8% of revenue, followed by TVS Motor at 19.6% and Honda Motorcycle & Scooter India at 10.4%.
This means changes in production plans or orders from major customers could have a meaningful impact on the company’s revenue.
The company also has exposure to raw material prices. Materials including copper, polymers and brass accounted for around 67.8% of revenue in FY26, according to Anand Rathi.
Investors also need to watch the company’s ability to execute its expansion plans, particularly as it increases capacity and moves further into EV-related products.
The research reports are broadly positive on Dhoot Transmission.
Anand Rathi has recommended “Subscribe for Long Term”, citing the company’s positioning in India’s automotive and EV ecosystem while flagging customer concentration and expansion execution as risks.
Swastika Investmart has also given a “Subscribe” rating. It highlighted the company’s revenue growth, leadership in two-wheeler and three-wheeler wiring harnesses and EV exposure, while describing the valuation as fairly priced.
Choice Securities has recommended “Subscribe”, citing Dhoot Transmission’s market position, EV and premiumisation opportunities, customer relationships, financial performance and R&D capabilities.
Ventura Securities has also rated the IPO “Subscribe”, highlighting its market position, EV exposure and financial performance.
The IPO offers two clear attractions.
First, the GMP of Rs 250 indicates a potential listing gain of around 29% over the upper issue price.
Second, the company has a strong position in automotive wiring harnesses, growing EV exposure, relationships with major vehicle manufacturers and plans to expand into higher-value electrical and electronic components.
The research reports are also broadly positive, with multiple brokerages recommending subscription, particularly for long-term investors.
But there are risks. The company has significant customer concentration, exposure to raw material prices, declining EBITDA and PAT margins and a valuation of around 45 times FY26 earnings at the upper price band.
For investors looking purely for a listing gain, the GMP is encouraging but does not guarantee that the stock will actually list at Rs 1,121.
For those looking at the business over the longer term, the key question is whether Dhoot Transmission can maintain its strong revenue growth, expand its EV business, diversify its customer base and execute its capacity expansion while protecting margins.
For now, the GMP points to a potentially strong listing, while the brokerage reports support the IPO from a longer-term perspective. But investors should look beyond the 29% GMP-implied gain before deciding whether to bid.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)