Financial Performance Highlights

Q2 FY27 Results:

  • Revenue from operations: ₹192.61 crores, up 43% quarter-on-quarter and 12% year-on-year
  • EBITDA (excluding other income): ₹40.06 crores
  • EBITDA margin: 20.8% (improved from 16.4% in Q1 FY27)
  • Profit after tax: ₹32.98 crores
  • PAT margin: 16.5%

H1 FY27 Performance:

  • Total sales approximately ₹330 crores
  • Business momentum picked up notably in Q2 after slow start in Q1

Operational Updates

Capacity Utilization & Expansion:

  • Current capacity utilization at 80-90%
  • Expecting 100% utilization in Q3 and Q4 FY27
  • Phase 3 expansion adding 6,500 MVA capacity progressing as planned
  • Civil foundation work, PEB erection, and utility infrastructure work in progress
  • All major production equipment ordered
  • Commissioning expected in April 2027
  • Total capacity will reach 14,000 MVA post-expansion
  • Breakeven utilization for new capacity at 35-40%

Export Market Conditions:

  • Middle East operations improved but not fully normalized due to geopolitical crisis
  • Higher shipping and logistic costs persist without significant easing
  • North America exports gained momentum following resolution of tariff-related challenges (50% tariff on Indian products withdrawn in February 2026)
  • European market: Efforts ongoing through exhibition participation, results expected in next 1-2 years

Order Book & Guidance

Current Order Position:

  • Order book: ₹550 crores
  • Domestic-export mix: 60% domestic, 40% export
  • Expected to improve toward higher export share in coming quarters

Revenue Guidance:

  • FY27: ₹750 crores target maintained (implies ₹225-230 crores quarterly run rate for H2)
  • FY28: ₹1,000 crores target
  • FY29: ₹1,250-1,500 crores target (at 100% capacity utilization)

EBITDA Guidance:

  • Targeting ₹200-220 crores EBITDA for FY27 (implied margin ~26-29%)
  • Focus on absolute EBITDA rather than percentage margins
  • Expect margin improvement in Q3 and Q4 with higher export orders and capacity utilization

Market Dynamics & Demand Outlook

Demand Drivers:

  • Power consumption expected to double in next 3-4 years
  • Strong demand from AI investments and data centers
  • Renewable energy capacity additions driving transformer demand
  • Battery energy storage systems (BESS) creating huge requirements
  • Transmission and distribution network expansion needs

Competitive Landscape:

  • Multiple players expanding capacity across industry
  • Company maintains higher EBITDA margins than peers due to export focus and operational efficiency
  • No significant margin pressure expected for next 2-3 years due to strong demand

Financial Metrics & Working Capital

Working Capital:

  • Net working capital increased to approximately ₹200 crores in H1
  • Includes financial assets of ₹29 crores (investments for new project)
  • Higher receivables due to LC structure: customers provide 180-day LCs with interest, while company offers 60-day credit
  • Company earns interest on extended LC periods
  • No bank facilities used for working capital
  • No alarming working capital situation perceived

Raw Material Costs:

  • RM prices stabilized but not at pre-conflict levels
  • RM cost as percentage of sales increased to 71-72% (from historical ~60%)
  • Sales prices have increased to offset some RM cost inflation
  • New orders priced at current market rates
  • March 2026 saw unusual RM price spike due to Middle East conflict

Product & Market Focus

Product Portfolio:

  • Minimal distribution transformer production
  • Focus primarily on renewable transformers
  • Expanding into 220 kV class transformers post-approvals (3-6 months approval process)
  • Existing customers have provided verbal commitments for 220 kV orders
  • Margin profile expected similar across voltage classes

Geographic Mix:

  • Q2 FY27 export contribution: ~40% of revenue
  • North America represents 40-60% of export sales
  • Target maintain 60:40 domestic-export ratio

Strategic Initiatives

Diversification Plans:

  • Exploring acquisitions in related fields
  • NDAs signed, details to be disclosed as plans progress
  • No specific sectors or companies identified in disclosure

Management Commentary

Margin Outlook:

  • Export margins remain higher than domestic
  • Maintaining balance between export and domestic order execution
  • Not specifically targeting percentage margins, focusing on absolute EBITDA growth
  • Operational efficiency and export focus key to maintaining superior margins

Capacity Ramp-up:

  • Full utilization of new capacity expected by FY29
  • Approval processes, trained manpower, and quality systems require time post-commissioning
  • 220 kV class transformers expected to contribute significantly to expanded capacity

Market Positioning:

  • Strong relationships with existing customers
  • Quality products and customer relationships driving repeat business
  • Participating in exhibitions to expand European presence