Extra High Voltage (EHV) Transformers Could Be the Next Big Thing: Top 5 Stocks to Track

Driven by urbanization, industrialization, and a rising population, rising power demand in India since the past few years has led to significant challenges in transmitting electricity efficiently across the country.

To address these issues, Extra High Voltage (EHV) technology has become essential. EHV systems enable the transmission of large amounts of electricity over long distances with minimal energy loss, making them crucial for India's energy future.

These are transformers that shift the voltage - step it up or down to meet the needs of transmission and distribution.

The Indian power transmission market is projected to grow significantly, with the HVDC transmission systems market estimated at US$ 3.6 billion (bn) in 2024 and expected to reach US$ 5.4 bn by 2029, growing at a CAGR of 8.7% during this period.

Among the leading transformer companies, there are only a few which are involved in the EHV segment.

Let's take a look at the top transformer companies that are also involved in the EHV segment.

These stocks are filtered using Equitymaster's stock screener and further by categorising the ones that are involved in the EHV segment.

Take a look...

#1 Voltamp Transformers

Voltamp Transformers, based in Baroda, is a well-known company in the transformer manufacturing business.

It produces oil-filled power and distribution transformers, dry-type transformers, compact substations, and ring main units. These products are used by industries like power, oil and gas, real estate, and infrastructure.

In the Extra High Voltage (EHV) segment, Voltamp is a leader with a 35% market share and over 22,000 installations across the country.

Its dry-type transformers are made with advanced technology from HTT, Germany, and it uses aluminium foil winding technology licensed from PROCOM, Germany. This focus on advanced technology helps Voltamp deliver reliable products for critical industrial applications.

Recently, the company announced a big expansion. It is investing Rs 2 bn to set up a new factory near Vadodara. This will increase its production capacity by 6,000 MVA annually. The new facility is expected to be ready by the first quarter of FY27.

On top of this, Voltamp secured a major order worth Rs 2.6 bn from Gujarat Energy Transmission Corporation, adding to its strong order book of Rs 12.9 bn as of October 2024.

Voltamp's future looks bright, thanks to growing demand for transformers driven by infrastructure and energy development in India.

Coming to financials, between FY22 and FY24, its revenue grew by 43%, supported by higher volumes and better pricing. Operating margins also improved from 12% to 20% during this time.

The company is debt-free and has investments worth Rs 10 bn as of H1FY25. With a solid foundation and clear growth plans, Voltamp is well-positioned for continued success.

For more details, check out Voltamp's financial factsheet.

#2 Bharat Bijlee

Bharat Bijlee, established in 1946, is a leading electrical engineering company in India known for manufacturing transformers, electric motors, elevator systems, and drives and automation solutions.

The company also provides turnkey services for EHV switchyards, high-voltage and medium-voltage substations, and electrical balance of plant projects, serving a wide range of industries.

Its products are used by state electricity boards, utilities, and large-scale industrial clients.

In the EHV segment, Bharat Bijlee holds a leadership position in the 220 kV transformer market, offering transformers with capacities up to 200 MVA.

The company continues to expand its presence by catering to growing demand from sectors like data centers, renewables, and metals, which contributed significantly to the 63% year-on-year (YoY) growth in its power systems segment in FY24.

A major recent highlight is Bharat Bijlee's significant investment in expanding its drives & automation service center and upgrading its plant to produce next-generation drives.

The company has also introduced new products, including the IE4 and IE5 SynchroVERT motors, for which it was granted patents.

Additionally, Bharat Bijlee's partnership with KEB Germany enhances its automation offerings, boosting its capabilities in precision-driven industrial applications.

With a growing order book of Rs 11.4 bn as of FY24 and planned capital expenditures of Rs 1.6-1.8 bn through FY26, Bharat Bijlee is well-positioned to capitalize on rising infrastructure and energy demands.

Coming to financials, the company reported its highest-ever cash flow and profit in FY24, repaying Rs 13.7 bn in debt, reducing its liabilities significantly, and maintaining strong financial health supported by non-current investments worth Rs 12.9 bn.

For more details, check out Bharat Bijlee's financial factsheet.

#3 DDev Plastiks Industries

DDev Plastiks Industries Ltd is a leading manufacturer of polymer compounds in India, specializing in products used across industries like cables, footwear, automobiles, and appliances.

It was demerged from Kalpana Industries in July 2022, which is into reprocessing and recycling business.

The company, founded in 2020, has quickly become the largest player in its sector, with a capacity of over 233,400 MTPA.

A key area of focus is the extra high voltage (EHV) segment, where DDev Plastiks is gearing up to launch XLPE compounds for cables up to 132 kV in 2025, with future plans to expand to 220 kV.

This EHV product line is crucial as demand for high-quality power cables grows in both domestic and global markets.

Recently, the company made significant strides in expanding its capacity for Halogen-Free Flame Retardants (HFFR), which are becoming increasingly popular for its eco-friendly properties.

DDev Plastiks currently has an installed capacity of 5,000 MTPA for HFFR and aims to ramp this up to 20,000 MTPA by FY26.

In terms of growth prospects, DDev Plastiks is well-positioned to benefit from rising demand in India's infrastructure and real estate sectors, which are boosting the need for cables and related materials.

The company also has a solid pipeline of new products and capacity expansions.

However, its export revenues have been impacted by high freight costs.

Coming to financials, DDev Plastiks reported Rs 5.8 bn in revenue for Q2FY25, with EBITDA at Rs 680 million (m).

The management remains optimistic, targeting Rs 50 bn in revenue by FY30, driven by its innovative products and capacity expansion plans.

For more details, check out DDev Plastiks' financial factsheet.

#4 Shilchar Technologies

Shilchar Technologies is a prominent player in India's transformer manufacturing industry, specializing in power, distribution, and telecom transformers.

Recently, the company has also ventured into producing ferrite transformers. Their product portfolio includes distribution transformers ranging from 5 KVA to 3,000 KVA and power transformers from 3 MVA to 15 MVA.

The company is actively focused on expanding its EHV transformer segment to cater to growing demand, particularly in India's power and energy sector.

One of the major recent developments for Shilchar Technologies is its substantial capacity expansion.

In August 2024, the company commercialized an additional 3,500 MVA capacity at its Vadodara facility, boosting its total installed capacity to 7,500 MVA.

Additionally, the company has experienced strong export growth, now generating 52% of its revenue from international markets, compared to 26% just two years ago.

Looking ahead, Shilchar is optimistic for growth in both domestic and export markets. The Indian government's significant investments in power transmission infrastructure, coupled with rising energy consumption, bode well for the company.

Similarly, export demand is expected to increase as aging grid infrastructure in Western countries requires modernization.

Shilchar's plan to fully utilize its expanded capacity by FY26 is expected to push revenues to Rs 7.5-8 bn, a considerable increase from the current Rs 5.5 bn revenue target for FY25.

The company has improved its profitability, with EBITDA margins exceeding 25% in FY24.

For more details, check out Shilchar Technologies' financial factsheet.

#5 Indo Tech Transformers

Last on the list is Indo Tech.

Indo Tech Transformers is a well-known manufacturer of power and distribution transformers, as well as special application transformers like mobile substation transformers and skid-mounted substations.

The company serves a broad range of industries, including transmission, generation, hydro, wind, solar, steel, cement, and utilities. Its transformers, ranging up to 245 KV, are in service at various substations and industries across India and worldwide.

One of Indo Tech's significant areas of focus is manufacturing EHV transformers. These transformers range from 5 MVA/11KV to 200 MVA/230 KV, catering to high-demand sectors such as utilities and industries requiring robust energy infrastructure.

In terms of recent developments, a notable change occurred in 2023 when Shirdi Sai Electricals Ltd (SSEL) acquired full ownership of Indo Tech by purchasing the remaining 5% stake from its former promoter, Prolec GE Internacional.

Indo Tech's focus on large power transformers, coupled with its broad industry reach, positions it well for future expansion. Its manufacturing capacity for power transformers stands at 9,000 MVA.

Coming to its financials, Indo Tech Transformers showed a strong performance during H1 FY25, with revenue increasing to 2,283.8 m, a growth of 20.8% compared to 1,890.3 m in H1 FY24.

This growth was driven by rising demand from key industries such as renewable energy, railways, and infrastructure.

Net profit came in at Rs 236.3 m, a sharp increase of 123% compared to Rs 106.1 m in the same period of the previous year.

Indo Tech Transformers was among the top 5 smallcaps that surged over 400% in 2024.

For more details, check out Indo Tech Transformers' financial factsheet.

Conclusion

The Indian transformer industry is poised for substantial growth, buoyed by favourable demand for transmission and distribution products.

increased international orders, rising infrastructure spending globally, the "China plus one" strategy, the embrace of renewable energy, and supplier consolidation collectively contribute to a promising future for the industry.

While most factors present an attractive long-term outlook, the risks associated with the sector also require a thorough and careful evaluation.

Investors should also consider corporate governance as one of the criteria for due diligence before considering an investment.

For more, check out the below video where Zill Jain talks about the top 5 transformer stocks in India.

Stay tuned to this space and happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...