The shares of leading transformer manufacturers gained up to 4.3 percent after the company announced a strategic investment in Posco Poggenamp Electrical Steel Private Limited.
With a market capitalization of Rs 16,936.11 crore, the shares of Transformers & Rectifiers (India) Ltd were trading at Rs 1,126.00 per share, increasing around 3.17 percent as compared to the previous closing price of Rs 1,091.35 apiece.
Reason for Rise:-
The shares of the company have seen positive movement after Transformers & Rectifiers (India) Ltd signed a Share Purchase and Shareholders’ Agreement to transfer a controlling stake in a strategic investment in Posco Poggenamp Electrical Steel Private Limited.
Moreover, this acquisition will allow TARIL to become completely integrated for processed CRGO requirements, and it will also produce considerable revenue by servicing external clients. On its own, this strategic purchase will assist TARIL enhance its EBITDA margins by 100 to 150 basis points.
Financial performance:-
Analyzing the company’s financial condition, revenue magnified by 80 percent from Rs 257 crore in Q2FY24 to Rs 462 crore in Q2FY25, during the same time frame net profit zoomed by 2200 percent from Rs 2 crore to a profit of Rs 46 crore.
Order Book & Client base:-
Transformers & Rectifiers (India) Limited had an unexecuted order book of Rs. 3,500 crores as of Q2FY25, and inquiries worth Rs. 18,500 crores were being negotiated.
The product-wise order book breakdown as of Q1FY25 consists of Power Transformers at 64.79 percent, Reactors at 27.55 percent, Furnace Transformers at 2.09 percent, Distribution Transformers at 3.78 percent, Rectifier Transformers at 0.88 percent, and Others at 0.87 Percent.
It has a robust client base that includes well-known companies such as Adani Renewables, Tata Power, KEC International, JSW, PowerGrid, Jindal Steel & Power, NTPC, Siemens Energy, Torrent Power, and others.
Growth Strategy:-
The company is moving from stabilization to consolidation, expansion, and sustainable profitability. New capacity of 15,000 MVA will begin commercial production in January 2025. A fully automated radiator facility is in trial runs, with 100% backward integration planned by Q1 FY25-’26.
Margin Guidance:-
Management aims to achieve higher margins, targeting a return to historical levels of 19%. The focus will be on increasing operational revenues, and prioritizing sustainable growth in core business areas while minimizing reliance on other income to drive long-term profitability.
Market position:-
The management highlights the company’s competitive edge in delivery timelines, with many competitors fully booked for the next two to three years. Thanks to its strong manufacturing capacity and delivery capabilities, the company is well-positioned to fulfill urgent orders efficiently.
Company snapshot:-
Transformers and Rectifiers (India) Limited is an India-based company, which manufactures power, furnace, and rectifier transformers. The Company is a manufacturer of a range of transformers, which provides to both the domestic and the international market.
Written by:- Abhishek Singh
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