💰 Financial Performance

Revenue Growth by Segment

The primary segment of manufacturing and selling transformers grew 31.6% YoY in FY25 to INR 149.54 Cr. H1 FY26 revenue reached INR 75.36 Cr, representing a 28.58% YoY increase.

Profitability Margins

Net Profit Margin for FY25 was 12.44% (INR 18.60 Cr profit on INR 149.54 Cr revenue). H1 FY26 Net Profit Margin improved to 12.49%, up 32 bps YoY. Operating margins have sustained at approximately 17%.

EBITDA Margin

H1 FY26 EBITDA margin was 18.9% (INR 14.27 Cr), growing 18.63% YoY in absolute terms.

Capital Expenditure

The company is expanding capacity with a new facility that has the potential to support annual revenue of INR 500 Cr to INR 550 Cr.

Credit Rating & Borrowing

Credit rating upgraded to [ICRA]BBB- (Stable) / [ICRA]A3 from [ICRA]BB+ / [ICRA]A4+. Interest coverage ratio was strong at 7.26 times for fiscal 2024.

⚙️ Operational Drivers

Raw Materials

Steel (CRGO) and copper are the primary raw materials for transformer manufacturing, though specific cost percentages for each are not disclosed.

Capacity Expansion

Current capacity is not stated in units, but planned expansion aims to increase revenue potential to INR 500-550 Cr per annum.

Raw Material Costs

Raw material costs (including changes in inventory) were approximately INR 110.42 Cr in FY25, representing 73.8% of total revenue.

Manufacturing Efficiency

Bank limit utilization was low at 13.29% on average for the 13 months through October 2024, indicating high financial flexibility and efficient capital use.

📈 Strategic Growth

Expected Growth Rate

30%

Growth Strategy

Growth will be driven by the execution of a healthy order book of INR 90 Cr (as of 9M FY25) and capacity expansion to support INR 500-550 Cr in annual revenue. The company is targeting high-growth sectors including renewables, steel capacity expansion, and power grid modernization.

Products & Services

Transformers of all varieties, including electrical transmission equipment and related engineering services.

Brand Portfolio

Supreme Power Equipment Limited (SPEL).

Market Expansion

Expanding reach across utility, renewable energy, and industrial segments (specifically steel and manufacturing modernization).

🌍 External Factors

Industry Trends

The transformer industry is seeing a supportive environment with good visibility due to capacity expansion in manufacturing and the shift toward renewable energy integration.

Competitive Landscape

Intense competition from both large and small players in the transformer segment limits bargaining power with customers.

Competitive Moat

Moat is built on the extensive experience of promoters and established long-term relationships with utility and industrial clients, which are sustainable but subject to competitive tender pressures.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending and power sector modernization, driven by national capacity expansion in industries like steel.

Consumer Behavior

Shift in demand toward more efficient transformers and equipment suitable for renewable energy grids.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Companies Act, 2013 and Accounting Standards specified under Section 133. Compliance with state discom tender requirements is critical.

Environmental Compliance

CSR expenditure was INR 21.47 lakhs in FY25, up from INR 9.90 lakhs in FY24.

Taxation Policy Impact

The effective tax rate for FY25 was approximately 27.3% (Total tax of INR 7.12 Cr on PBT of INR 26.05 Cr).

⚠️ Risk Analysis

Key Uncertainties

Tender-based revenue model (100% of income) and susceptibility to raw material price volatility (steel/copper) which can squeeze the 17% operating margins.

Third Party Dependencies

High dependency on state discoms for order flow and payment realizations.

Technology Obsolescence Risk

The company is addressing modernization trends through capacity expansion and product acceptance in the renewable segment.

Credit & Counterparty Risk

Credit risk is primarily linked to slow payment realizations from state discoms, though liquidity is supported by ample surplus cash accruals of INR 13-14 Cr per annum.