Transformers & Rectifiers India Ltd Q2 FY2027 Concall Summary

Key Takeaways

• Revenue surged, margins expanded: Q2 FY27 revenue grew 66% YoY and EBITDA margin reached 16.1%, driven by higher capacity utilization at the Moraiya plant.
• Order book provides deep visibility: Unexecuted orders hit ₹7,237 crores, up 32% YoY, executable over 18–24 months, with another ₹21,000 crores in active negotiations.
• Strategic entry into nuclear power: A first-ever order from NPCIL for generator transformers marks a breakthrough into a high-value, repetitive infrastructure segment.
• Backward integration is the margin story: The CTC plant is on track for Q3 FY27 commissioning, with management targeting 200–300 bps of margin expansion once fully ramped by FY29.
• What to watch next quarter: Commercial production from the Changodar expansion, the pace of order inflow conversion from the ₹21,000 crore inquiry pipeline, and any update on the HVDC qualification timeline.

Revenue & Profitability

• Top-line acceleration: Q2 FY27 revenue grew 66% YoY and 27% QoQ, supported by improved capacity utilization and execution.
• Margin leap: EBITDA margin improved to 16.1% from 8.8% YoY and 13.3% QoQ, reflecting the benefit of higher operating leverage. H1 FY27 EBITDA margin reached 14.6% versus 13.4% in H1 FY26.
• Other expenditure control: Other expenditure remained largely static YoY despite the significant revenue increase and is expected to stay in the same range as a percentage of sales.
• Raw material risk contained: Prices of transformer oil and CRGO remain elevated, but the majority of orders carry price variation clauses, so the margin impact is limited. Price variation is billed and passed through to customers quarterly.
• Working capital reality: Net working capital days stand at 154, reflecting long manufacturing cycles, milestone-based billing, testing requirements, and project-linked customer approvals. Management is targeting a reduction to 110–120 days, which would generate positive cash flows.

Mehul Shah: "The prices, etc., are still on the higher side, but what we have, we have a majority of order which is having, say a price variation clause. So mainly it does not affect our margin in a big way."

Order Book & Demand Visibility

• Order book depth: The unexecuted order book rose 32% YoY to ₹7,237 crores, providing strong medium-term revenue visibility with execution over the next 18–24 months.
• Inflow momentum: Q2 FY27 order inflow of ₹1,169 crores grew 97% YoY over a low base. Management expects inflows to continue in the next two quarters.
• Inquiry pipeline: Inquiries under negotiation total ₹21,000 crores, expected to be finalized in some time, with 20% of that pipeline coming from export markets.
• Order book discipline: Management is deliberately limiting the unexecuted order book to not beyond 24–28 months to avoid overextending delivery timelines.
• Execution lag: Current orders being received are for delivery beyond 12–18 months, executable in FY29–FY30, which limits near-term revenue acceleration despite the large order book.

Satyen J. Mamtora: "We are trying to limit ourselves to orders -- unexecuted order book for not beyond 24 months to 28 months. So we are trying to keep that in check."

Strategic Initiatives & New Markets

• Nuclear sector entry: The company received its first-ever order for the nuclear power sector, supplying generator transformers for NPCIL Kaiga Units 5 & 6. Management noted NPCIL orders are repetitive as India builds more nuclear projects.
• UK subsidiary established: A subsidiary was set up in September 2026 to strengthen customer support and expand presence in UK and European markets, with plans to develop local assembly and sales capability that could evolve into a manufacturing base.
• Data center traction: The company is already a regular supplier to large data centers in India and abroad and has registered as a manufacturer for many large data center facilities, giving it a preference.
• HVDC qualification path: The company is currently repairing a transformer for PGCIL, a 4–5 month process followed by 6–7 months of successful running, after which it can qualify for HVDC manufacturing tenders. Full HVDC and converter transformer capability is expected within 18 months.
• BESS opportunity: The company is not currently executing any BESS orders but is seeing inquiries and expects to receive some BESS transformer orders in the current quarter, though it is still assessing the market size.
• Technical validation: The company successfully completed dynamic short-circuit testing on three transformers (400 kV and 220 kV auto transformers and power transformers) for specific customers and electricity boards, validating its ability to meet international standards.

Capacity Expansion & Backward Integration

• Changodar expansion imminent: The new transformer manufacturing expansion at Changodar is near completion, with commercial production expected to commence around Diwali. The facility adds close to 35,000 MVA of capacity at a capex of approximately ₹150 crores.
• Moraiya EHV plant next: Work on a new EHV transformer plant at Moraiya will start once the Changodar project is finished, with production expected from FY28 onwards.
• Immediate Moraiya capacity bump: An additional ~30% manufacturing capacity will be added at Moraiya immediately once the insulation plant (backward integration) is functional, as insulation manufacturing space shifts out.
• CTC plant timeline: Plant and machinery installation is underway, with commissioning before Diwali (Q3 FY27), trial runs in November–December, and commercial manufacturing by Q4 FY27. Output will initially be captive for TARIL transformers, with external market sales starting from Q1 FY28.
• Margin expansion target: Management expects 200–300 bps of margin expansion from backward integration, with the full effect visible by FY29.
• Capacity utilization ambition: Management is targeting 90% capacity utilization, working toward it this year or next, and will be better placed to assess once all plants are ready.

Mehul Shah: "We are looking at around 200 basis points to 300 basis points margin expansion through this backward integration."

Competition & Pricing Environment

• Pricing discipline holding: Management sees no evidence of a price war or margin erosion by competitors, attributing this to the fact that everybody has enough orders in hand.
• No additional funding needed: Current capacity expansion and backward integration projects are already fully funded and planned, with no additional capex required.

Satyen J. Mamtora: "I don't see there is a huge price war or lowering of margins by competitors. Everybody has enough orders in hand."

The \$1 Billion Ambition

• Target and timeline: Management is targeting \$1 billion in revenue by late FY29 or early FY30 and is "very much aggressive in reaching that target."
• Revenue composition: The \$1 billion target includes not just transformer sales but also bushing sales, test board sales, CRGO sales, CTC sales, and output from a tank manufacturing unit described as one of the largest in Asia.
• Bridge question unanswered: An analyst noted that at 90% utilization of 75,000 MVA and ₹7 lakh/MVA, transformer revenue peaks at approximately ₹5,000 crores, questioning how the remaining gap to \$1 billion (over ₹8,300 crores) is filled. Management cited the non-transformer revenue streams but did not provide a numerical bridge or MVA-based reconciliation.

Satyen J. Mamtora: "So you are only taking transformer sales. We are also looking at bushing sales, test board sales, CRGO sales. We are also looking at CTC sales. Our tank manufacturing unit, which is going to be one of the largest in Asia. So with all these sales adding up, we are pretty much sure we will reach \$1 billion."

Guidance & Commitments

Key Metrics