New Delhi, May 26 -- Private equity firm Bain Capital is preparing to monetize an India portfolio company it first backed a little more than a year ago before doubling down this year, in a quick liquidity move that could help it generate spectacular returns.

The PE firm, whose India portfolio includes wealth manager 360 ONE WAM Ltd, gold-loan financier Manappuram Finance Ltd and chemicals maker Novopor, infused Rs 1,022.6 crore ($107 million) into Dhoot Transmission Ltd in March. This takes Bain's total investment into the automotive component manufacturer to Rs 4,979 crore.

In April last year, US-based Bain had pumped Rs 3,956.2 crore (about $462 million at the prevailing forex rates) into the company through a primary infusion of capital and a secondary purchase of shares from Dhoot's founders.

The PE firm now owns a 55% stake in the company, according to the updated draft red herring prospectus that Dhoot Transmission has filed to float an initial public offering.

Dhoot Transmission had confidentially filed for the IPO in February this year. The updated prospectus, filed after receiving approval from the Securities and Exchange Board of India (SEBI), shows that the company seeks to raise Rs 1,400 crore through a fresh issue of equity shares. Bain intends to offload 16.31 million shares, or about a sixth of the stake it holds in the company, through an offer for sale.

Valuation and return estimates

Bain's latest infusion values Dhoot around Rs 9,050 crore, or just under $950 million, back-of-the-envelope calculations show. That compares with last year's post-money valuation of about Rs 8,080 crore, or $944 million at the forex rates prevailing then. The rupee has lost over 11% against the dollar since Bain first invested in Dhoot.

The company hasn't decided its IPO price band yet but a person familiar with its plans told VCCircle it could target a valuation of as much as $2 billion in the IPO. That translates to nearly Rs 19,000 crore at current exchange rates.

This is also broadly in line with the valuation multiples of some of its listed peers.

For instance, Motherson Sumi Wiring India Ltd commands a price-to-earnings multiple of 46.70 times based on its FY25 revenue while Minda Corp's P/E multiple was 50.37 and Sona BLW Precision Forgings Ltd's 58.34.

At the lower end of this range, Dhoot Transmission could command a valuation of around Rs 18,700 crore based on its estimated annualised earnings for FY26. At this valuation, Bain could pocket Rs 1,450-1,500 crore through the offer for sale. This would translate into a multiple on invested capital of 1.8-1.9x and an internal rate of return (IRR) of at least 45% in rupee terms, if it floats the IPO by December this year. The IRR could rise above 50% if Dhoot goes public before October, VCCircle estimates show.

Both scenarios comfortably exceed the minimum 20% IRR that private equity firms typically chase in rupee terms. Its returns in dollar terms will likely exceed the 15% benchmark but will depend on the forex rates.

To be sure, Bain's actual realised returns will depend on the timing and price at which it eventually sells its stake.

Company performance

Dhoot Transmission has delivered strong growth over the past two years. Revenue rose 62% to almost Rs 3,445 crore in FY25 from Rs 2,126 crore in FY23, while profit after tax more than doubled to nearly Rs 354 crore from Rs 164 crore. EBITDA margins expanded to 17.15% from 14.05% during the same period.

For the nine months ended Dec. 31, 2025, revenue was Rs 3,247.7 crore while net profit was Rs 301.5 crore.

The company holds a 44.6% share of India's two- and three-wheeler wiring harness market by value and commands over 70% of the electric two- and three-wheeler wiring harness segment. Electric vehicle-related revenue as a share of the total jumped from 8.1% in FY23 to 25.2% in FY25 - a key metric that differentiates it from peers that focus on vehicles powered by internal combustion engines. Its key customers include Bajaj Auto, TVS Motor Co, Honda Motorcycle and Scooter India, and Royal Enfield.

Of the Rs 1,400 crore to be raised in the fresh issue, approximately 55% will be used for debt repayment - including Rs 494 crore to retire the parent company's borrowings and Rs 273 crore to pay down debt at four subsidiaries. Another Rs 150 crore is earmarked for new manufacturing plants at Jhajjar in Haryana, and Shoolagiri (Hosur), Tamil Nadu. The balance is allocated for acquisitions and general corporate purposes.

Axis Capital, Jefferies India, Kotak Mahindra Capital, Nomura, SBI Capital Markets, and 360 ONE WAM are managing the IPO.

Published by HT Digital Content Services with permission from VC Circle.