T R I L — Q3 FY25 earnings call

Call held 8 Jan 2025

Management summary

Transformers and Rectifiers India Limited reported robust Q3 FY25 results with significant year-on-year growth across key financial metrics. The company secured new orders worth INR631 crores, bolstering its unexecuted order book to INR3,686 crores. Management highlighted strategic backward integration initiatives, including the acquisition of a CRGO processing unit, and a focus on high-margin orders to drive future profitability and efficiency. Capacity expansion projects are progressing, with operations expected to commence early next fiscal year.

Highlights

  • Revenue from operations stood INR545 crores, reflecting a strong year-on-year growth of 49%.

  • EBITDA for the quarter was INR87 crores, marking a significant increase of 136% YoY.

  • Operational EBITDA margin was 15.69%.

  • Profit after tax for Q3 was INR50 crores, showing a healthy year-to-year growth of 276%.

  • PAT margin was 9.12%.

  • New orders in Q3 FY25 amounted to INR631 crores.

  • Unexecuted order book as on December 31, 2024, stands at INR3,686 crores.

  • Inquiries worth INR19,000 crores are under negotiation or in the bidding stage.

Key financials

  1. Revenue ₹545 Cr +49%YoY
  2. EBITDA ₹87 Cr +136%YoY
  3. EBITDA Margin 15.7%
  4. PAT ₹50 Cr +276%YoY
  5. PAT Margin 9.1%
  6. Order Inflow ₹631 Cr
  7. Order Book ₹3,686 Cr

What they filed

Q1 FY27: revenue up 8.1%, net profit down 4.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue462 559 676 529 460 −0%737 +32%783 +16%572 +8%
EBITDA69 85 131 88 52 −25%125 +47%118 −10%93 +6%
Net profit46 55 94 67 37 −20%76 +38%91 −3%64 −4%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Revenue

  • Revenue Target Revenue · FY26 · High confidence INR3,500 crores plus
    We intend to achieve a revenue target of INR3,500 crores plus in next financial year.

    — Chanchal Rajora, CFO and Advisor to the Board

  • Long-term Revenue Target Revenue · next 3-4 financial years · Medium confidence US 1 billion
    I am happy to inform you that we are on the right path to achieve a US 1 billion revenue in the next 3-4 financial years.

    — Chanchal Rajora, CFO and Advisor to the Board

  • Revenue Target Revenue · FY25 · High confidence INR2,000 crores
    Our FY25 revenue target is INR2,000 crores. And we are still on that target.

    — Chanchal Rajora, CFO and Advisor to the Board

Profitability

  • PAT Margin Profitability · near future · High confidence 10%
    my more emphasis is on the PAT, that I want to reach the 10% PAT level. And I'm happy to say that we are very, very close to that.

    — Chanchal Rajora, CFO and Advisor to the Board

  • PAT Increase from Backward Integration Profitability · when all projects online · High confidence minimum 4%
    It is going to be minimum 4% increase in the PAT when we put all the projects online, on track.

    — Jitendra Mamtora, Chairman

  • EBITDA Improvement from CRGO Acquisition Profitability · Q1 next year · High confidence start
    The EBITDA improvement from this particular acquisition will start from the Q1 next year when this is 100% integrated with our system.

    — Chanchal Rajora, CFO and Advisor to the Board

Raw Material Cost

  • Raw Material Reduction from Backward Integration Raw Material Cost · when all projects online · High confidence about 4% total
    the advantage which we are going to get using our own product will reduce my raw material by about 4% total.

    — Jitendra Mamtora, Chairman

Operations

  • Technological Tie-ups Operational Operations · Q4 FY26 · High confidence operational
    We expect them to be operational by Q4 FY26.

    — Satyen Mamtora, Managing Director

Capacity

  • 15,000 MVA Capex Operation Start Capacity · early next year (Q1 FY26) · High confidence start operation
    we expect early next year the operation will start

    — Chanchal Rajora, CFO and Advisor to the Board

  • Post-Expansion MBA Levels Capacity · post expansion · High confidence around 55,000 MBA levels
    post this expansion, we will be somewhere around 55,000 MBA levels.

    — Chanchal Rajora, CFO and Advisor to the Board

Order Mix

  • Export Order Book Percentage Order Mix · end of next financial year · High confidence 20%
    we will just focus that we should have a 20% order book by end of next financial year from the exports.

    — Chanchal Rajora, CFO and Advisor to the Board

Order Book

  • Order Book Target Order Book · end of this financial year · High confidence INR4,000 crores plus
    we will be having an order book of INR4,000 crores plus by the end of this financial year.

    — Chanchal Rajora, CFO and Advisor to the Board

Order Conversion

  • Enquiry Conversion Rate Order Conversion · current market · Medium confidence 15-20%

    Previously 25-30% → 15-20%

    the conversion may be not 25%, 30%, it may be 15% to 20%.

    — Satyen Mamtora, Managing Director

Risks & concerns

  • Lower enquiry conversion rate

    medium

    Management expects the conversion rate of INR19,000 crores inquiries to drop from 25-30% to 15-20% due to a focus on higher-margin, selective orders.

    Management acknowledged

  • CRGO scarcity in India

    medium

    Management confirmed CRGO is a scarce commodity in India, which does not produce it, highlighting the critical role of processing units and the importance of their backward integration.

    Management acknowledged

  • Limited balance sheet transparency

    medium

    Management declined to disclose Q3 gross debt, net working capital, and acquisition cost, citing SEBI guidelines for Q4 audited numbers, which could be a concern for investors seeking timely financial health updates.

    Analyst deflected

Areas of evasion (6)

  • QIP fund utilization details
  • acquisition cost
  • gross debt and net working capital figures for Q3
  • specific product mix details for margin analysis
  • incremental margin on new orders
  • green hydrogen market share (initially)

Q&A highlights

0 direct, 1 evasive
Order booking strategy and QIP funds Partial
As far as the order book is concerned, this is a deliberated strategy of the company as we don't want to take the orders in a hurry. We are already booked. And now we are more focused on the orders, which has got the high margin as well as the payment terms are quite good. ... As far as the QIP is concerned, let me tell you that we have no intent to raise the money near future.

Reveals management's strategic shift towards selective, high-margin orders over volume, and clarifies that QIP approval is enabling, not an immediate plan for fundraising.

Asked by Raj Sarraf

Balance sheet figures and acquisition cost Evasive
Manish, I'll address this question when I'll present you my quarter 4 audited numbers, please. Because since we have not disclosed the balance sheet, so under the guidelines of SEBI, these figures cannot be disclosed here at this moment. ... Sir, with the SEBI guidelines I am bound not to disclose that [acquisition cost].

Management's repeated refusal to disclose key balance sheet figures (gross debt, working capital) and acquisition cost, citing SEBI guidelines for Q4, limits timely transparency for investors.

Asked by Manish Ostwal / Rajit Aggarwal

New capacity utilization and revenue guidance Partial
Ganesh, first of all in this 3,500 there is no addition of the facility which is coming up. All is from the existing set of the system. This is one. ... So, Ganesh, the 3,600 order book is for the next 18 months to 24 months. So, we would be doing INR3,500 crores partly from the existing facility and partly from the new facility that we are going to start.

Management provided somewhat conflicting statements regarding whether the FY26 revenue target of INR3,500 crores would be met solely from existing capacity or also from the new facility, creating ambiguity about the ramp-up strategy.

Asked by Ganeshram

2 min read 6 chapters

Detailed narrative

Strong Q3 FY25 Financial Performance

Transformers and Rectifiers India Limited reported robust financial results for Q3 FY25. Stand-alone revenue from operations grew by 49% year-on-year to INR545 crores. EBITDA for the quarter surged by 136% to INR87 crores, achieving an operational EBITDA margin of 15.69%. Profit after tax (PAT) saw an impressive 276% year-on-year growth, reaching INR50 crores, with a PAT margin of 9.12%.

Healthy Order Book and Strategic Inflow

The company secured new orders worth INR631 crores during Q3 FY25. As of December 31, 2024, the unexecuted order book stood at a strong INR3,686 crores, providing revenue visibility for the next 18-24 months. Management emphasized a 'deliberated strategy' to focus on high-margin orders with good payment terms, rather than solely on volume, despite a large inquiry pipeline of INR19,000 crores.

Backward Integration and Capacity Expansion Progress

TARIL has achieved 100% backward integration in CRGO processing, a critical raw material constituting 30-35% of total raw material cost, through the acquisition of Posco Poggenamp Electrical Private Limited. This initiative is expected to yield a 'minimum 4% increase in the PAT' and reduce raw material costs by 'about 4% total'. The 15,000 MVA capex expansion is on track for completion by February-March, with operations expected to commence in Q1 FY26, and orders for this new capacity will start being taken from the current quarter.

Ambitious Revenue and Profitability Targets

The company reiterated its FY25 revenue target of INR2,000 crores and set an ambitious FY26 revenue target of 'INR3,500 crores plus'. Long-term, TARIL aims to achieve 'US 1 billion revenue in the next 3-4 financial years' on an annual basis. Management expressed confidence in reaching a '10% PAT level' sustainably, with EBITDA improvement from the CRGO acquisition expected to start from Q1 next year.

Domestic Market Focus and Export Strategy

TARIL plans to limit its export orders to 20% of its order book by the end of the next financial year, prioritizing the Indian market where opportunities are 'much, much better'. To mitigate freight rate volatility, the company has stopped taking orders on a CIF basis, focusing instead on FOV or export basis. This strategic shift aims to capitalize on robust domestic infrastructure development.

Working Capital Management and People Development

The company's strategies are centered on achieving a streamlined balance sheet by reducing debtors and optimizing inventory management, with the ultimate aim of becoming a debt-free company. Management also highlighted significant emphasis on people management and upskilling initiatives throughout FY25, focusing on enhancing technical skills and fostering leadership across all divisions.

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