Transformers and Rectifiers (India) Ltd. (TARIL) is expanding manufacturing capacity and bringing more component production in-house as demand for transformers rises across power transmission, renewable energy and industrial applications. The company's order book reached Rs 7,237 crore in Q2FY27, while new nuclear power orders and a planned entry into high-voltage direct current (HVDC) equipment could broaden its business.
The expansion also carries an earnings test. TARIL reported a 61% year-on-year increase in Q2FY27 revenue and a 460-basis-point improvement in its EBITDA margin. It now plans to increase manufacturing capacity, raise backward integration from 10-15% to 80-85% and improve margins by 200-300 basis points as new facilities come on stream.
Meeting its FY27 revenue target of Rs 3,200 crore will require faster order execution in the second half of the year. The company must also commission its new facilities on schedule and improve capacity utilisation to translate its investment programme into sustained earnings growth.
Earnings Growth
TARIL manufactures power, distribution, furnace, rectifier and speciality transformers, as well as shunt and series reactors. Its products cover voltage classes from 5 kV to 1,200 kV and capacity ratings from 0.5 MVA to 500 MVA. Its customers include utilities, renewable energy installations, railways, steel plants and other industrial users.
In Q2FY27, revenue increased 61% year-on-year to Rs 739.4 crore as production and order execution accelerated across its factories. EBITDA more than doubled, rising 119% to Rs 128.8 crore, while the margin expanded 460 basis points to 17.4%. Net profit rose 117% to Rs 81 crore.
Higher production volumes supported revenue growth, while operating leverage helped improve margins. Sustaining the improvement will depend on whether TARIL can execute a larger order book as additional manufacturing capacity becomes available.
Capacity Expansion
TARIL is expanding annual capacity at its Changodar facility from 12,000 MVA to 35,000 MVA. This will take its total transformer manufacturing capacity to 75,000 MVA. The plant will produce distribution transformers, renewable energy transformers and power transformers rated up to 220 kV.
Commercial production at Changodar is expected to begin around Diwali, with full-scale production targeted by Q4FY27. The company also plans to increase capacity at its Moraiya facility, which currently stands at 40,000 MVA, by more than 30%.
The expansion supports potential revenue of Rs 5,000 crore to Rs 6,000 crore, compared with revenue of Rs 2,507 crore in FY26. TARIL estimates an average realisation of around Rs 7 lakh per MVA across its product mix and has set a target of reaching $1 billion in revenue by FY30.
Capacity additions alone, however, will not determine the returns from this investment. The company must bring the facilities into production and secure sufficient orders to utilise the additional capacity.
In-House Production
TARIL currently manufactures 10-15% of its material requirements in-house, including tanks, radiators and bushings. It plans to raise backward integration to 80-85% by Q1FY28 through investments across five product lines, including continuously transposed conductors (CTC), pressboard insulation and cold-rolled grain-oriented (CRGO) steel processing.
A 24,000 metric tonne per annum CTC plant is scheduled to begin commercial production in Q3FY27. Around 60% of its output will be consumed internally. A 10,000 MTPA pressboard insulation facility is expected to be completed by Q4FY27.
The company is targeting Q1FY28 for the completion of a 50,000 MTPA structural fabrication plant, which will house a large transformer tank manufacturing unit. Full commercial commissioning across the backward integration facilities is targeted for the same quarter.
Management expects these investments to reduce unit costs and improve operating margins by 200-300 basis points. The benefits are expected to begin reflecting in FY28, with the full impact coming in FY29. TARIL also plans to sell surplus component production to external customers.
The expected improvement will depend on timely commissioning and capacity utilisation. If the facilities take longer to reach commercial production or operate below planned levels, the margin benefits could take longer to materialise.
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Nuclear Orders
TARIL has secured its first nuclear power order from Nuclear Power Corporation of India Ltd. (NPCIL) for generator transformers at the Kaiga Units 5 and 6 project.
The transformers carry voltage ratings of 400 kV and above. TARIL competed with established manufacturers, including Crompton, to win the contract. The order marks its entry into a specialised market where technical qualifications and product reliability are important.
The win builds on the company's existing focus on high-voltage equipment. Transformers rated at 400 kV and above account for around 55-60% of TARIL's total order book. The NPCIL contract also qualifies the company to participate in future nuclear tenders.
With NPCIL planning additional nuclear power projects across India, management expects further orders. Transformers account for an estimated 15-18% of equipment costs in greenfield nuclear projects, creating a potential market for qualified suppliers.
However, the first order establishes an opportunity rather than a guarantee of repeat business. Future growth in this segment will depend on additional project awards and TARIL's ability to meet the requirements of nuclear power customers.
HVDC Entry
TARIL is also seeking to enter the HVDC transformer market, which could expand its opportunities in power transmission. As part of the qualification process, the company has started re-engineering and repair work on a Power Grid Corporation of India Ltd. transformer.
Management expects the qualification process to take 18 months. Successful qualification would make TARIL eligible to bid for commercial utility tenders. The opportunity therefore depends on the outcome of testing and the completion of the qualification process.
The company is also expanding its overseas presence. In September 2026, it established a subsidiary in the UK to develop sales and customer support across European markets. It plans to explore local assembly capabilities over time.
Exports accounted for 8% of Q2FY27 revenue and 15% of the order book. A larger international presence could diversify TARIL's customer base, although exports remain a smaller part of its current business than domestic demand.
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Order Visibility
TARIL's unexecuted order book stood at Rs 7,237 crore as of Q2FY27, up 32% year-on-year. Power transformers accounted for 83% of the total, providing revenue visibility over the next 18-24 months.
The company also has a bidding pipeline of around Rs 21,000 crore under negotiation. Domestic enquiries account for 80% of the pipeline, with exports making up the remaining 20%. These opportunities could support future order growth, but they are not part of the existing order book.
For now, converting secured orders into revenue is the more immediate priority. TARIL is targeting revenue of Rs 3,200 crore in FY27, compared with Rs 2,507 crore in FY26. It expects an EBITDA margin of 16% and a net profit margin of 9-10%.
At a 10% net profit margin, revenue of Rs 3,200 crore would translate into net profit of Rs 320 crore.
TARIL reported revenue of Rs 1,311 crore in H1FY27. To meet its annual target, it needs to generate around Rs 1,889 crore in H2FY27, or approximately Rs 944.5 crore per quarter. This is higher than the Rs 739.4 crore it reported in Q2FY27.
The second-half revenue requirement makes the pace of order execution and the commissioning of additional capacity central to the company's FY27 outlook.
Valuation Test
At a market capitalisation of Rs 9,900 crore, TARIL trades at 33 times earnings, below its five-year median price-to-earnings multiple of 39 times. Its valuation is also below those of larger peers, including CG Power at 105 times earnings, Hitachi Energy at 108 times, Siemens at 86 times and GE Vernova at 75 times.
The lower multiple relative to these peers provides a valuation comparison, but the company's earnings trajectory will depend on execution. Capacity expansion and backward integration could support revenue growth and margin improvement, while nuclear orders and a potential entry into HVDC equipment offer additional avenues for business development.
The immediate priorities are more concrete: execute the existing order book, commission new manufacturing facilities on schedule, improve operating margins and meet FY27 guidance. The extent to which TARIL delivers on these objectives will determine whether its investment programme translates into the earnings growth management is targeting.
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