Transformers and Rectifiers (India) Limited (TARIL.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Transformers and Rectifiers India Limited Q1 and FY '26 Earnings Conference Call hosted by Antique Stockbroking Ltd. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Dhirendra Tiwari from Antique Stockbroking. Thank you, and over to you, sir.

Thank you. Good day, ladies and gentlemen. Let me extend my warm welcome to you to discuss 1Q FY '26 results of Transformers and Rectifiers India Limited. To discuss results, I am pleased to have with us today Satyen Mamtora, MD and Mr. Chanchal Rajora, CFO and adviser to the Board. Before starting the call, let me again congratulate the entire team of TRIL for outstanding performance yet again. With this, I hand over the call to Mr. Satyen for initial remarks. Over to you.

Good evening ladies and gentlemen, A very warm welcome to all of you, and thank you for joining us on our Q1 FY '26 earnings call. It gives me a great pleasure to connect with you at the beginning of what promises to be an exciting transformative year for our organization. Earlier today, our Board of Directors has approved the audited financial results for the quarter ending June 30, 2025. And the same have been submitted to the stock exchanges and published along with investor presentation. Let me begin with some of the key highlights from this quarter. During quarter 1 FY '26, we recorded a total order inflow of INR 665 crores reflecting the strength of our market position and customer confidence. This momentum has translated into unexecuted order book of INR 5,246 crores as of June 30, 2025, providing strong revenue visibility for the next 15 to 18 months. A standout achievement this quarter was securing a single largest export order in our company's history valued at USD 16.6 million from one of the leading energy EPC from the country -- from Botswana. This milestone underscores not only our growing international presence but also our ability to deliver complex and high-value solutions to global customers. On manufacturing front, we are making strong progress on our capacity expansion and backward integration road map. The construction of our new 22,000 MVA manufacturing capacity at Moraiya facility has commenced. This facility will be reaffirming our commitment to operational excellence. In parallel, we have initiated expansion of our CRGO processing unit along with construction of our new backward integration units aimed at enhancing quality control and supporting long term vision for self-reliance. These strategic initiatives are aligned with our ambition to become a global force in transformer industry. I am pleased to share that we remain firmly in our track journey towards achieving USD 1 billion in revenue over the next 3 financial years. On behalf of the entire leadership team, I extend my heartfelt gratitude to all our stakeholders, customers, employees, suppliers, board members and investors. Your continued trust and support remains the cornerstone of our journey. Together, we are building a future ready organization that will not only lead transformer industry, but also contribute meaningful to India's evolving energy landscape. I'll now hand over -- before handing over the mike to, CFO, Mr. Chanchal, I would like all of you to please welcome Mr. Mukul Srivastava. He joined us as a position of CEO and help us grow in the manufacturing sector. I hand over now to our CFO, Chanchal, to take you through the financial performance in greater detail.

Good evening, everyone, and thank you Satyen sir for the strategic overview and you're inspiring leadership through what has been a period of strong execution and transformation. I'm pleased to take you through the financial performance for the first quarter of FY '26, which builds the momentum of last year and reflects our continued focus on the profitability and sustainable growth. Let's begin with the key highlights of the quarter. Revenue from the operation stood at INR 510 crores on a stand-alone basis, marking a 64% year-on-year growth over the same quarter last year. EBITDA came at INR 97 crores, showing 127% increase year-to-year, driven by the scale benefits and improved cost efficiencies. Profit after tax was INR 60 crore, a significant 227% year-to-year growth reflecting strong operational performance and discipline in executions. Improvements of the operational efficiency and process optimization has begun to reflect positively on our profitability. Our EBITDA and PAT margins have expanded meaningfully over the period -- over the prior year, and we continue to maintain the sharp focus on the cash flows and working capital management. We also continued to improve across our key operational and financial resources ratios and strengthening our balance sheet further and enhancing return on capital metrics. As of 30th of June 2026 in quarter 1, our current ratio stands 2.25 reflects a strong liquidity. The trade receivables days is at 126 days, which includes the retention money also. While the trade receivables are at 72 days, indicating the better working capital cycle management. Looking ahead, we remain committed to the driving margin expansion, enhancing capital efficiency and progression towards becoming a net debt-free company next over 18 to 24 months. We are fully committed to our long-term goal of reaching USD 1 billion in revenue in the next 3 financial years and we believe that we are well on track to achieve this. In conclusion, I would like to express my deepest gratitude to all of our stakeholders, our customers, investors, board members and especially to our hard-working employees for their continued trust and belief in our journey. Your support drives us -- drives our passion to deliver expense and create long-term values. With that, I conclude my remarks, and thank you all once again for the continued support and interest. We will now open the floor for the questions. Thank you.

[Operator Instructions] The first question is from the line of Manish Ostwal from Nirmal Bang.

Good set of numbers, another great execution in the business. My question on our annual report, which we have released recently. So there's a trade receivable in the non-current assets which is sitting INR 336 crores versus INR 2 crores last year. So can you explain why the trade receivable is sitting in the noncurrent asset, basically, to understand because it should be part of the -- your current assets. So why we have put it that way?

Manish, thank you for this question, and welcome on this call. Manish these are the noncurrent nature receivables, which includes the retention money, which we are going to get from the utilities in 1 to 1.5 year time and also it includes the revenue debtors which are not immediately due for the payments. So this classification has been done by our auditors on their advice to understand better the exact trade receivable cycle what company is having.

So what is the typical time frame to receive this money of INR 336 crores?

Look, this is not INR 336 crores, out of INR 336 crores around INR 180 crores was around on the retention money, which we basically get in 12 to 15 months' time with the utilities. And it is a continuous process, which is keep coming. Next question please, Shruti.

The next question is from the line of Samarth Khandelwal from ICICI Securities.

Sir, firstly, congratulations on the performance. So my question is regarding what would be the size of specialty transformers for the company as opportunities?

Sorry, I didn't get your question.

The size of special duty transformers that the company has. So what would be the annual...

It's around 35% of the turnover.

The next question is from the line of Raj [indiscernible].

Congratulations first of all for posting once again very stellar set of numbers. So just wanted to ask the margin which is bumped up if I compare the same from last financial year quarter 1. So is it sustainable? And what would be -- how we assess the PAT margin going forward keeping all backward integration keeping in mind, which is coming in the next 3, 4, 5 quarters?

Raj, yes the margins are sustainable. Backward integration is going to help us in a great deal in terms of protecting our profits, but also with Mukul sir joining us, we are working towards operational excellence, and we are working towards how to grow operational profit. So that is going to help us more in terms of -- not raw material cost, but in terms of how efficiently we run our plants now. So that is going to help us a lot in securing our margins.

And Raj, just to continue what our MD has told just now, if you see that last 3 quarters, quarter-by-quarter, we are strengthening our margins. And this shows the trend is sustainable and on the right direction.

Okay. And just one other question. Now if I see government of India target to have a solution of high voltage transformer that is going to be actually double than the last we have done in financial year '25. So though we have targeted the number of INR 3,500 crores that is very phenomenal, so what is the -- by seeing the execution capacity and the capacity which is coming on right now to execute, so is the execution can be in line with what is the country going to install the capacity going forward?

Every transformer manufacturer is trying to align itself towards the country demand. And we are also working on that direction and we hope that we all will be able to cater the country's requirements pretty soon.

Okay sir. Any ballpark number, sir, if you can guide us for margin and PAT margins going forward?

We are at the levels which are already going on has been -- I have been telling throughout my call that around 17%, 18% is the numbers, which is a sustainable number and we are working on that direction and we are delivering that numbers. Right?

Once again congratulations and wish you best luck for the future.

The next question is from the line of [ Ashish Soni from Family Office ].

INR 18,000 crore order book, when do you expect and what percentage are we expecting to convert for next...

How much?

You have INR 18,000 crore order book, right?

No, no. these are inquiries under negotiation.

Yes, yes. So that one, how many are you expecting in the next 2 quarters or 3 quarters out of that?

So we should be closing our order book next year at around INR 5,000 crores.

But I think you guided -- if I recollect last quarter, you guided...

The INR 5,000 crores next year. So on 1st April 2026, our unexecuted order book would be INR 5,000 crores, and we are expecting around INR 3,500 crores of turnover of this -- on this year.

So next year, you'll again start with INR 5,000 crore order book, that's what you are saying because if I recollect...

Yes, that's what I am saying.

Last quarter, you told I think INR 8,500 crores by next year order book wise, if I recollect.

Look, Ashish, what we -- what MD is trying to tell you is that we are basically now working on the directions where we can have the high-margin order books and high-margin revenues and higher margin orders. We are targeting that we should have the number of somewhere around INR 5,000 or INR 5,500 crores plus order book, which will give the high yield revenue instead of going for each and every order, right? Yes, that's what we are targeting.

Your next question is from the line of Anupam Goswami from SUD Life.

Sir, wanted to understand what is now if you can give us some color on the TAM offers like where -- which transformers level we are at and that capacity what is the TAM growing at? And export any scenario or any color if you can fetch and after this tariff how difficult or any challenge we will face or not?

Anupam can you repeat the first part of the question again?

Capacity of transformers we are in, in that, what is -- how is the macro scenario looking at? How is the market looking at and what kind of growth you are looking and also in the export point?

The country is planning to expand a lot of capacity, almost doubling the power generation capacity. So we -- I mean, like any other transformer manufacturer, we are also trying to add the capacity and this scenario is likely to remain there for at least 5 to 7 years. That is what we also expect. As regards to your question on exports, we are looking at certain areas for exports. You know that we won an order from one of the major customer at USD 17 million from Botswana. But we are a little bit choosy because already with the existing order book we have, we have little scope for expanding on exports.

Our exports remain at 10%.

Sir, any exposure to U.S.?

Not currently. Nothing that we have in hand.

The next question then [ Ankur Goel from Green Portfolio ].

Okay. So my question is after all expansions are complete, how much revenue and order execution does management expect will come from each plant?

Ankur, if you remember that we have been in the last 2, 3 quarters, we have been guiding that we are working on a direction of $8 billion revenue -- $1 billion revenue, and this revenue basically includes the expansions that we are doing here. So as we are targeting for next three year number, so this includes the revenue which is coming from the expansion also.

Okay. And sir, my second question is regarding receivable days. As you know that from past quarter, receivable days are improved significantly. How sustainable is this in the context of raising volumes and new client segments?

This is a long -- this is a long-term sustainable figure what we are eyeing and the last 3 quarters, if you see that we are continuously delivering that.

Next question comes from the line of Samarth Khandelwal from ICICI Securities.

My question is regarding recently government came out with that they'll be promoting -- coming out with a incentive scheme for producing in India high voltage related transmission equipment. So do we see any opportunity there? How do we think about this?

It is not for the transformers actually, but we are still exploring if anything something is there for us. But it is not for us. It is basically the equipment like RIP bushings and others.

Okay. Okay. Sir, one more question, if I may. This is with respect to the capacity -- expansion capacity we are undertaking. Could you outline by when it will come live?

Sorry, which capacity are we talking about?

We are undertaking an expansion of manufacturing.

Moraiya plant should be operational by end of quarter 2.

The 15,000 MVA capacity?

The expansion yes, yes. The expansion of Moraiya plant should be operational by end of quarter 2.

The next question comes from the line of Rajesh Vora from [ Saltoro Investment Advisors ].

Shruti, I have a small request. Please take the repeat questions at the last once all people who are in line are finished. Please request participants to one question at one time.

[Operator Instructions] Next question is from the line of Rajesh Vora from [ Saltoro Investment Advisors ].

Congratulations on a great set of regards. I wanted to understand the competitive scenario. So on one hand, the incumbents are raising their capacity given the demand. And on the other hand, there are new players who are also trying who are in low voltage and entering into 400 KV and higher voltage class, so I want to understand how does it move from in a couple of years of time and for new players, particularly, how long does it take for them to certify and start competing with players like us? If you could take through that kind of positioning ourselves to deal with the competition, that would be great.

Rajesh, see, currently, our unexecuted order book is INR 5,246 crores -- live inquiries which are in finalization stage in the next 2 quarters. And we are hopeful that we should be ending our year with at least INR 5,500 crores order in hand executable for the next year. New competition is coming, yes. But at the same time, that competition has to have their PQs met. As long as the PQs don't meet, which will take at least another 18 months for them to meet PQs. So I don't see there any change in the scenario in terms of T&R's orders. And also there is so much business and demand in the market that even with the new players that are coming in, not much effect is going to be on established manufacturers.