TARIL Leads the Charge. Can Other Transformer Companies Deliver Similar Growth?

The curious thing about booms is that by the time you realise one is happening; the smartest money has already moved on.

But every once in a while, a sector begins to stir and offers a second chance to make a good profit.

Transformers are central to India's energy ambitions. Over the past year, transformer makers have quietly become key beneficiaries of the country's largest infrastructure push in decades.

Leading the pack is Transformers and Rectifiers India Ltd (TARIL), a stock that has jumped more than 18x in the last two years.

But this rally isn't a coincidence. The surge comes on the back of volume growth, margin expansion and order wins. And while the company may be the frontrunner, it's far from a one-stock story.

The transformer ecosystem is entering a new phase of relevance and the market has noticed.

What's Driving the Demand?

India's renewable energy target of 500 GW of non-fossil capacity by 2030 is well documented. But the hardware that connects generation to consumption has been lagging for some time now.

The Central Electricity Authority (CEA) projects the addition of 12,192 new power substations by 2030, with total substation capacity rising from 482,810 MVA in 2022 to about 624,332 MVA - a 29% increase.

Installed power generation capacity is expected to reach 786 GW by 2030, of which nearly 63% will come from renewable sources. This scale-up places significant pressure on the domestic transformer and reactor supply chain, both in terms of capacity and timelines.

Meanwhile, developed economies are facing their own grid constraints. The US grid is ageing, Europe is undergoing decarbonisation and a slowdown in China has temporarily eased global competition.

Lead times for power transformers have stretched. Export inquiries, as a result, are rising.

For the first time in decades, Top Indian transformer companies are seeing a sustained upcycle - both in domestic and global markets.

The Indian Railways is continuing with its electrification push and newer metro corridors are emerging in Tier-2 cities like Indore, Lucknow and Nagpur. Each of these projects requires transformers - for traction substations, power evacuation, and signalling.

Green hydrogen adds another layer of growth. Electrolysers require rectifier transformers. These are high-capacity, custom-built units with strong margins. Private EPC players are also scaling up. That's not just state utilities - it includes data centres, commercial infra, and rail electrification.

Apart from all this, Indian firms are stepping into global markets. REC and PowerGrid are leading infra projects in Africa and Southeast Asia. Alongside cables and conductors, transformers are now getting exported as part of bundled turnkey solutions.

At the grid level, the rollout of 765 kV transmission corridors and HVDC infrastructure is picking up pace. Only a handful of Indian manufacturers - including TARIL, Voltamp, and CG Power - have the scale and technical depth to compete in this space.

On the profitability front, margins across the transformer sector are gradually improving. Raw material prices have stabilised, execution cycles have shortened and automation is beginning to yield productivity gains.

While there are several players in the industry, one stands out.

TARIL: The Breakout Story

Until recently, Transformers and Rectifiers (India) Ltd. (TARIL) was a relatively modest player in the Indian power equipment sector.

The company manufactures a broad range of transformers, including power, distribution, furnace, rectifier and specialty transformers. It also supplies reactors and mobile substations, with applications across industrial, transmission, and green energy sectors.

In FY25, the company reported a significant improvement in operational and financial performance. Revenue rose 53% YoY to Rs 19.5 bn, while EBITDA increased 149% to Rs 3.2 bn.

EBITDA margins expanded from 10% to 16.1%. Profit after tax rose over four times to Rs 1.87 bn, compared to Rs 420 m the previous year.

The return on capital employed improved to more than 20%, with the company's debt to equity ratio falling to 0.21.

Transformers and Rectifiers Financial Snapshot (2020-24)

	2019-2020	2020-2021	2021-2022	2022-2023	2023-2024
Revenue Growth (%)	-17.35%	4.87%	55.86%	19.90%	-7.42%
Net Profit Margin (%)	0.15%	1.03%	1.23%	3.03%	3.63%
Return on Capital Employed(%)	7.66%	9.40%	10.40%	14.97%	15.02%
Return on Equity (%)	0.31%	2.25%	4.08%	11.28%	9.91%

Source: Equitymaster

The improved performance was driven in part by a shift in strategy.

TARIL began processing its own Cold Rolled Grain Oriented (CRGO) steel, one of the most expensive raw materials in transformer manufacturing.

The company also announced plans to expand its production capacity from 40,000 Mega Volt Ampere (MVA) to 75,000 MVA over the next 12 to 18 months.

The first phase of 15,000 MVA is expected to become operational by May 2025, with the second phase adding 22,000 MVA by February 2026.

TARIL closed FY25 with Rs 51 bn in unexecuted orders. During the year, it secured Rs 45 bn in fresh orders, including a Rs 7.4 bn order from GETCO.

In March 2025, it also raised Rs 5 bn through a qualified institutional placement to support its expansion and backward integration efforts.

The company currently has inquiries under negotiation worth over Rs 220 bn. The management has indicated a longer-term goal of reaching US$ 1 bn in revenue by FY28 from the current US$ 235 m. To support this, TARIL is investing Rs 5.5 bn over the next 15 months and plans to become fully backward integrated by Q1 FY27.

While the numbers suggest meaningful improvement, sustainability will depend on the company's ability to execute its expansion plans, maintain margins, and convert its pipeline into orders.

While TARIL is scaling aggressively to capture the demand surge, peers are pursuing different strategies.

Other Players Aren't Sitting Still

Voltamp has traditionally been a conservative player in the transformer industry, preferring a steady, disciplined approach to growth.

The company operates with zero debt, boasts margins exceeding 20% and maintains a clean balance sheet. It focuses on capital efficiency rather than pursuing aggressive expansion.

At the close of FY24, Voltamp's order book stood at Rs 18.5 bn and it began FY25 with Rs 8.4 bn in new orders. The company's manufacturing capacity remains at 16,000 MVA, primarily serving private EPC contractors and industrial clients.

With a 5-year profit CAGR of 29% and FY24 ROCE of 25%, Voltamp stands out for its financial consistency.

Peer Comparison

Company	FY25 Rev (Rs Cr)	5-Yr PAT CAGR	Comments
TARIL	1,950	46%	Outperformer; backward integrated; Rs 51 bn order book
Voltamp	1,448	22%	Clean balance sheet, high margins, conservative expansion
Shilchar	312	49%	Niche in renewables, solid RoCE, high export mix
CG Power	7,255	Turnaround	Diversified, margins solid, transformer focus growing again
Apar	12,146	34%	Conductor, cable and oil leader; transformers a part of infra bundle

Source: Equitymaster

Shilchar Technologies is positioning itself as a specialist in a different segment of the transformer industry. Unlike many of its peers, it does not focus on Extra High Voltage transformers.

Instead, the company has carved out a strong presence in the renewable energy sector and exports. Over 50% of Shilchar's revenues are derived from clients based in the US and Europe.

Its FY25 order pipeline stands at Rs 550 bn (bn). High return ratios, low capex intensity, and a tightly focused portfolio make it a niche but efficient operator.

CG Power, backed by the Murugappa Group, has emerged as a powerful turnaround story. After cleaning up operations, the company delivered record performance in FY24. It had an order book of Rs 59 bn as of December 2024.

Looking ahead, it is investing Rs 1.25 bn in transformers and Rs 2.8 bn into its motor division. The ROCE stood at an impressive 48.8%, with RoE at 36.4%.

APAR Industries takes a more integrated approach, bundling transformers with conductors, cables and insulating oils. Its conductor order book was Rs 76 bn as of December 2024 and overall FY25 revenues are tracking above Rs 130 bn.

APAR remains a diversified infrastructure play, benefiting from both public grid expansion and private-sector demand.

Risks and Valuations

TARIL now trades at 46 times its FY25 EBITDA, up from 4x two year ago. CG Power also commands a premium. If government orders slow or utility payments are delayed, working capital can get stretched. Interest rate hikes or policy changes could also impact momentum.

Execution is key. These stocks are priced for growth - and only consistent delivery will support high valuation multiples.

Moreover, while margins have improved, transformer profitability remains highly sensitive to input costs - particularly CRGO steel and copper.

Although prices have moderated since the post-COVID surge, any sharp increase, especially in copper, could squeeze margins for companies without backward integration or effective cost pass-through mechanisms.

The Bottomline

TARIL may have sparked the rally, but the rest of the pack is gaining ground. This is no flash-in-the-pan capex story. It's a structural reset.

India's push to build its grid - both for domestic and export markets - is creating a multi-year demand runway for transformers. And with only a few credible, listed players in the fray, the odds favour those who get execution right.

Compared to global majors like Siemens Energy or Hitachi Energy, Indian manufacturers are still price-competitive but increasingly credible on quality and lead times - particularly in standardised 220-400kV units.

While custom engineering remains a moat for global giants, Indian players are now making inroads through bundled EPC exports and joint bids in Africa and Southeast Asia.

While capacity expansion is underway, technology remains a bottleneck. Smart transformers, IoT-enabled monitoring and condition-based maintenance systems are the future.

Indian players are beginning to catch up - but partnerships, R&D investments, and skilled talent will determine who leads the next leap.

Can Others Deliver TARIL-Like Growth?

Possibly - but not all are trying to.

TARIL's breakout wasn't just about demand - it was about scaling aggressively, integrating backward and chasing large orders.

Peers like Voltamp prefer capital efficiency over volume and Shilchar is playing a high-ROE, export-focused game with less exposure to grid cycles. CG Power and APAR are growing fast, but from different base businesses.

In short: yes, others can deliver - but not all will. The transformer rally has room for multiple winners, but the strategies (and valuations) are diverging fast.

Investors will have to keep an eye on order inflows, execution timelines, capacity expansion, and working capital cycles.

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