TARIL - Transformers and Rectifiers (India) Limited Share Price

In the Q1 FY '26 earnings call held on August 1, 2025, Management provided a positive outlook for Transformers and Rectifiers (India) Limited (TARIL). Key highlights included a total order inflow of INR 665 crores for the quarter and an unexecuted order book of INR 5,246 crores as of June 30, 2025, demonstrating strong revenue visibility for the next 15 to 18 months. A milestone was reached with the securing of the company's largest export order ever, valued at USD 16.6 million from Botswana.

Management emphasized ongoing capacity expansion and backward integration efforts, with the new 22,000 MVA manufacturing capacity at the Moraiya facility already under construction. The aim is to achieve USD 1 billion in revenue over the next three financial years.

Financially, standalone revenue increased significantly by 64% year-on-year to INR 510 crores, with EBITDA of INR 97 crores reflecting a 127% growth. Net profit for the quarter was INR 60 crores, a year-on-year increase of 227%, with EBITDA and PAT margins both expanding.

Management expressed confidence in sustainable margin growth, with targets for EBITDA margins around 17% to 18%. This was attributed to operational excellence and enhanced capital efficiency. Key points for the future include maintaining a trajectory towards becoming a net debt-free company within 18 to 24 months and continuing to focus on high-margin orders as they finalize their order book, targeting around INR 5,000 to 5,500 crores over the next financial year.

Q&A Section from Earnings Transcript (August 1, 2025)

1. Question from Manish Ostwal:
"Can you explain why the trade receivable in non-current assets is sitting at INR336 crores versus INR2 crores last year?"
Answer:
"The non-current receivables include retention money expected from utilities in 1 to 1.5 years, as well as revenue debtors not immediately due. This classification was done per our auditors' advice to better illustrate our trade receivable cycle."

2. Question from Samarth Khandelwal:
"What would be the size of specialty transformers for the company as opportunities?"
Answer:
"Specialty transformers constitute about 35% of our turnover. This segment presents significant growth opportunities given the rising demand for specialized power solutions."

3. Question from Raj Sarraf:
"Is the margin increase sustainable, and what PAT margin can we expect going forward?"
Answer:
"Yes, the margins are sustainable. Backward integration will enhance profit protection. We anticipate maintaining PAT margins around 17%-18% moving forward."

4. Question from Ashish Soni:
"How much of the INR18,000 crore order book is expected to convert in the next 2 to 3 quarters?"
Answer:
"We expect to finish the year with about INR5,000 crore in order book, targeting high-margin revenue and being selective with orders for better profitability."

5. Question from Anupam Goswami:
"What is the country's capacity expansion and how do we stand regarding exports?"
Answer:
"The country aims to double its power generation capacity, and while we are keen to grow our exports, our current focus is on fulfilling our extensive domestic order book. Exports currently account for 10% of our business."

6. Question from Ankur Goyal:
"How much revenue is expected from each plant after expansions are complete?"
Answer:
"Our goal is to achieve $1 billion in revenue, encompassing ongoing expansions. Each plant will contribute significantly to meet this target over the next three years."

7. Question from Priyesh Babariya:
"Are we facing a decline in order inflows compared to peers?"
Answer:
"We approach orders selectively, targeting favorable profit margins. While peers might show higher inflows, we prioritize quality orders, backed by a robust inquiry pipeline totaling INR18,000 crores."

8. Question from Rucheeta:
"What has led to the recent bump in gross margins, and is this a new norm?"
Answer:
"This increase is due to a combination of pricing power, enhanced operational efficiencies, and better raw material management. We believe this margin level could be the new norm as we keep improving."

9. Question from Sourav Khara:
"What gives you confidence in maintaining the current growth trend?"
Answer:
"Our strong order book and growing inquiries assure us of sustained growth. We are targeting a capacity utilization increase to around 85%-90% this year."

10. Question from Abhijit Singh:
"What is the progress on the green hydrogen transformers?"
Answer:
"Our green hydrogen transformers are still in R&D. The market viability needs further evaluation before we can estimate sales or targets related to this product category."

These summaries encapsulate the main queries and responses from the Q&A section of the earnings conference call held by Transformers and Rectifiers (India) Limited, reflecting the company's strategic outlook and operational updates.