Detailed Narrative
Capacity Expansion & Diversification
Vilas Transcore successfully expanded its total installed capacity from 12,000 metric tons per annum (MTPA) to 36,000 MTPA, a significant 200% increase. This expansion is aligned with the company's long-term strategy to meet growing demand and improve operational efficiencies. The company also diversified its product portfolio by introducing transformer radiators with an installed capacity of 7,200 MTPA and nanocrystalline cores, with commercial operations for the new plant expected to begin by July 2025.
Strong Financial Performance in H2 & FY25
For H2 FY25, total income grew 27% year-over-year to INR195 crores, with EBITDA (including other income) rising 70% to INR31 crores, achieving a 15.7% margin. Profit after tax (PAT) for the half-year increased 67% to INR20 crores, with a 10.2% PAT margin. For the full year FY25, total income was INR362 crores (up 15% YoY), EBITDA was INR54 crores (up 55% YoY) with a 14.8% margin, and PAT was INR34 crores (up 48% YoY) with a 9.4% margin. The company also reported strong return ratios with ROE at 16.4% and ROCE at 17.7%.
New Product Offerings and Margin Profile
The company introduced transformer radiators and nanocrystalline cores. Radiators, critical for heat distribution in transformers, are targeted to contribute INR35-36 crores in revenue for FY26 with a 20-22% EBITDA margin. Nanocrystalline cores, used in advanced applications like EV chargers, are expected to contribute INR50 crores in revenue for FY26 with a higher gross/EBITDA margin of approximately 25%. These new products are expected to enhance the value-added product mix and contribute meaningfully to revenue growth and overall company margins.
Operational Challenges and Resilience
The journey to capacity expansion faced challenges including delays due to multiple statutory approvals, unforeseen flooding at the project site, and a shortage of labor and skilled workers. Despite these setbacks, the company demonstrated resilience, with all machinery now in the final stage of installation and trial production imminent. Management expressed confidence in achieving full capacity utilization on the existing 12,000 MTPA capacity in FY25, producing 12,069 MT.
Market Outlook & Raw Material Dynamics
Management noted strong and sustained customer demand, with the company well-positioned to meet rising demand in both domestic and international markets. The CRGO market saw pricing fluctuations, with a 2% decrease this period. The company maintains a 60% local and 40% imported raw material sourcing mix, with imported materials generally being lower priced. Despite some market panic regarding Chinese BIS-approved material, management has maintained its pricing strategy, focusing on quality and delivery.
Capital Expenditure and Funding
The total capital expenditure for the expansion was approximately INR90 crores, with INR50 crores spent by March 31, 2025, and the remaining to be spent in Q1 FY26. Of this, INR40 crores was directly invested in expansion, with INR7.5 crores for IPO expenses and INR2.5 crores for other corporate expenses. The company remains net debt-free, maintaining a healthy and conservative balance sheet structure. Management anticipates an asset turnover of 10x for the new expansion, indicating high capital efficiency.
Future Growth and PGCIL Approvals
Vilas Transcore aims for INR600 crores turnover in FY26 and INR1,000 crores in FY27, targeting a CRGO market share of 5-6% from the current 3%. The company plans to apply for PGCIL approval for higher kV products (220kV, 400kV, 765kV) starting July 2025, with approval expected in 6-7 months. This will enable them to cater to a broader range of power transformer manufacturers. The blended EBITDA margin is projected to be 12-14% for FY27, and the effective tax rate is expected to normalize📎 to 25% in FY26.