Transformers & Rectifiers India Ltd Q1 FY2026 Concall Summary

Key Takeaways

• Record quarter, margin-led: Revenue grew 64% YoY to INR510 crores, but the real story is PAT up 227% YoY and EBITDA up 127% YoY, driven by a deliberate shift toward high-margin order selection and operational efficiency.
• Strategy pivot to "pick and choose": Order inflow declined 5% YoY as the company now selects orders for margin and delivery fit, not volume. Management is targeting a high-yield order book of INR5,000-5,500 crores plus by next year.
• Gross margin reset to a new normal: Gross margin expanded ~200 bps QoQ to the 30-35% range, a level management calls sustainable and potentially improvable as backward integration into CRGO processing comes online.
• Capacity build-out underway: Construction of a new 22,000 MVA facility at Moraiya has commenced, with the 15,000 MVA expansion expected operational by end of Q2, supporting a stated \$1 billion revenue ambition over three years.
• What to watch next quarter: Whether the seasonal Q1 order inflow dip (INR665 crores vs INR2,200 crores in Q4) reverses in H2 as management expects, and if the 30-35% gross margin holds as the new baseline.

Financial Performance

• Top-line surge: Revenue of INR510 crores grew 64% YoY, reflecting strong execution and scale benefits from a high-margin order book.
• Profitability breakout: EBITDA of INR97 crores (up 127% YoY) and PAT of INR60 crores (up 227% YoY) show operating leverage kicking in alongside disciplined cost control.
• Margin trajectory: Both EBITDA and PAT margins have strengthened quarter-by-quarter over the last three quarters, a trend management argues is now structural rather than cyclical.
• Gross margin step-change: The ~200 bps expansion this quarter came from a combination of price increases, operational efficiency, and tighter raw material control. Management says the 30-35% level is the new normal, with further upside possible as backward integration reduces input costs.
• Working capital discipline: Trade receivables improved to 72 days, and the current ratio of 2.25 signals strong liquidity. Management views the improved receivable days as a long-term sustainable figure.
• Non-current receivables explained: INR336 crores classified as non-current on auditor advice includes INR180 crores of retention money (recoverable in 12-15 months) and revenue debtors not immediately due, not a sign of collection stress.

Chanchal Rajora: "We are at the levels which are already going on has been — I have been telling throughout my call that around 17%, 18% is the numbers, which is a sustainable number and we are working on that direction and we are delivering that numbers."

Order Book & Demand Environment

• Order inflow declined by design: The 5% YoY drop in order inflow reflects a conscious "pick and choose" strategy. The company now selects orders based on revenue margins and delivery timelines, explicitly choosing not to chase every available order.
• Inquiry pipeline remains large: Inquiries under negotiation stand at INR18,000 crores, down from INR22,000 crores in Q4. Management attributes the fluctuation to seasonality and long-gestation project cycles, not a demand slowdown, and notes that Q1 and Q2 are historically slow for order booking.
• Demand cycle has legs: With the country planning to double power generation capacity, management sees the demand scenario lasting at least 5 to 7 years, providing a long runway for the capacity expansion underway.
• Order book target: The company aims to hold an unexecuted order book of INR5,000 crores by April 1, 2026, targeting around INR3,500 crores in turnover this year. The aspirational range is INR5,000-5,500 crores plus, built entirely from high-yield, high-margin orders.
• Pricing stability: Incremental order inflow pricing is holding at the same levels as the existing book, with no sign of competitive erosion despite the selective approach.

Chanchal Rajora: "We are targeting that we should have the number of somewhere around INR5,000 or INR5,500 crores plus order book, which will give the high yield revenue instead of going for each and every order, right?"

Capacity Expansion & Backward Integration

• Moraiya expansion on track: Construction of a new 22,000 MVA manufacturing capacity at the Moraiya facility has commenced. The 15,000 MVA expansion component is expected to be operational by the end of Q2.
• Backward integration into CRGO: Expansion of the CRGO processing unit has been initiated alongside construction of new backward integration units. Management expects this to create a structural cost advantage over competitors on both raw material cost and delivery timelines.
• Competitive moat widening: With expansion and backward integration, T&R believes it will hold an advantage over new entrants who lack the same control over raw material sourcing and lead times.
• Capacity utilization ambition: The company is targeting 85-90% utilization levels this year, implying a rapid ramp-up as new capacity comes online.

Satyen Mamtora: "when T&R is looking now with all the expansion that we are doing and all the backward integration, we will have a certain advantage over the raw material cost of everything. When we have that advantage on the raw material cost and also the deliveries of the raw material, definitely, we are going to be at a better advantage than them."

Product & Market Developments

• Specialty transformers: Represent about 35% of turnover, a meaningful and stable share of the revenue mix.
• Green hydrogen transformers in R&D: The company is developing large transformers for green hydrogen applications, currently at the R&D stage. Management estimates the opportunity could touch INR500-550 crores, but cautions that financial viability will take time and declined to estimate the total addressable market.
• HVDC still exploratory: The company is still exploring the 1,200 kVA side of HVDC with nothing concrete yet. Management will update when something materializes.
• No US exposure by choice: The company currently has no inquiries from the US and is "very wary" of getting any, insulating it from tariff or trade-policy risk in that market.
• Government incentive scheme not applicable: A scheme for producing high-voltage transmission equipment in India covers items like RIP bushings, not transformers, so T&R cannot benefit from it.
• Export share steady: Exports remain at 10% of turnover, with orders aimed at the same 10% share next year. Export margins are at the same level as domestic.

Satyen Mamtora: "We currently have no inquiries from U.S., and we are very wary of getting any inquiries from U.S. or -- so there is nothing that can harm us either way."

Strategy & Leadership

• New CEO appointed: Mukul Srivastava has joined as CEO to help grow the manufacturing sector, with operational excellence initiatives expected to further improve operational profit.
• High-margin order book strategy: The company is explicitly prioritizing margin and delivery fit over volume, a shift from pursuing every available order. The goal is an order book that generates high-yield revenue rather than top-line growth for its own sake.
• Net debt-free commitment: Management is committed to becoming a net debt-free company over the next 18 to 24 months, signaling capital discipline alongside the expansion cycle.
• Revenue ambition intact: The company remains firmly on track toward a USD100 crore (approximately \$1 billion) revenue target over the next three financial years, a figure that includes revenue from the expansions underway.

Satyen Mamtora: "I am pleased to share that we remain firmly in our track journey towards achieving USD100 crore in revenue over the next 3 financial years."

Guidance & Commitments

Key Metrics