Transformers stock is a promising investment to monitor, as its revenue is projected to increase by 44% annually over the next three years
Transformer stock with revenue guidance of more than 40% for the next 3-4 financial years is definitely worth keeping on your radar.
On Friday, shares of a leading manufacturer of transformers and reactors in India experienced a significant surge of nearly 3.1 percent, reaching an intraday high of Rs. 1,057 on the BSE.
Stock Performance
With a market capitalization of Rs. 15,323.5 crores, the shares of Transformers & Rectifiers (India) Limited (TRIL) closed in the red at Rs. 1,021, down by 0.4 percent from its previous closing price of Rs. 1,025.2.
The stock reached its 52-week high at Rs. 1,300.45 on January 8, 2025. Compared to Friday’s closing price of Rs. 1,021, the stock is currently trading at a discount of nearly 28 percent.
TRIL has delivered impressive returns of nearly 289 percent in the past year, with around 37 percent positive returns in the last six months. However, the shares of Transformers & Rectifiers have experienced a decline of approximately 12.5 percent in the last month.
Management Guidance & Capex
The revenue target for FY25 is set at Rs. 2,000 crores, with expectations for FY26 to exceed Rs. 3,500 crores. Furthermore, the long-term revenue guidance for TRIL aims to achieve $1 billion in revenue over the next 3-4 financial years.
This ambitious goal implies a compound annual growth rate (CAGR) of nearly 44 percent, driving revenue from Rs. 2,000 crores in FY25 to approximately Rs. 8,600 crores (or $1 billion) by the end of FY29.
Management is optimistic about growth prospects in the Indian energy sector, particularly with significant opportunities in infrastructure development.
The company is strategically focusing on high-margin and quick-payment projects to enhance profitability. TRIL is dedicated to optimizing its product mix while maintaining a sustainable margin trajectory, aiming for EBITDA margins of 17 percent or higher by FY27.
In terms of capital expenditure, TRIL’s capacity expansion project of 15,000 MVA is progressing as planned and is expected to be operational by February-March 2025, with order bookings set to commence in Q1 FY26.
Recent Developments:
In Q3 FY25, TRIL acquired a controlling stake in a CRGO processing unit, achieving full backward integration and projecting a nearly 4 percent reduction in raw material costs. The company also secured a supply agreement for mother coils, a significant component in transformer production. CRGO materials make up 30-35 percent of the total raw materials used.
Furthermore, TRIL has entered into three strategic technological partnerships to enhance capabilities and improve supply chain efficiency, with implementation expected by Q4 FY26.
Order Book:
As of Q3 FY25, TRIL’s unexecuted order book stood at ₹3,686 crores. Power Transformer products accounted for 66 percent, followed by Reactor products at 27 percent, and Special Duty Transformers at 7 percent.
The new order flow for the quarter totaled Rs. 631 crores, with ongoing negotiations for inquiries amounting to over Rs. 19,000 crores. Additionally, TRIL successfully conducted a Short Circuit Test on a 500 MVA Transformer, showcasing its technical expertise and capabilities.
Financial Performance:
The company has achieved remarkable financial growth, with revenue from operations increasing by nearly 51.5% year-on-year. This growth is evident in the numbers, rising from Rs. 369.4 crores in Q3 FY24 to Rs. 559.4 crores in Q3 FY25.
Furthermore, the company’s net profit also saw a significant increase during the same period, jumping from Rs. 15.8 crores to Rs. 55.5 crores, representing an impressive growth of around 252% year-on-year.
In terms of EBITDA, the company experienced a substantial increase from Rs. 40.1 crores in Q3 FY24 to Rs. 93.8 crores in Q3 FY25, marking a growth of 134% year-on-year. Additionally, the company’s EBITDA margins grew from 10.81% to 16.5% over the same period.
Company Overview:
Transformers and Rectifiers (India) Limited (TRIL) specializes in manufacturing power, furnace, and rectifier transformers. TRIL offers a diverse range of transformers, including power transformers, distribution transformers, furnace transformers, rectifier transformers, and shunt reactors. These products find applications in the power transmission and distribution sector, as well as various industrial sectors.
With a global footprint, TRIL has completed over 16,000 installations worldwide and operates in more than 25 countries. The company has also conducted a ‘Dynamic Short Circuit Test’ on 153 Transformers at prestigious test laboratories such as KEMA and CPRI.
For more market insights, follow our blog.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like ET, NSE India.
Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.