Margin outperformance continues
TRIL beat our Q2FY25E by a mile powered by strong execution (+80% YoY), lifting OPM to ~15%. New OI grew ~3x YoY to INR10bn, jacking up backlog to INR35bn (executable over 15–18 months) even as tender pipeline is strong at INR170bn+ (20% strike rate). Management maintained FY25E revenue guidance of INR20bn with EBITDA margin of 14%-plus, expanding to INR45bn and 17%, respectively, by FY27E.
HV power transformer manufacturers are seeing a Goldilocks phase of T&D cycle—high demand (domestic + exports) coupled with short supply spurring premium pricing and margins. Factoring in higher margins and other income, we are raising FY25E/26E EPS by 18%/3% (FY27E unchanged); retain ‘BUY’ with a TP of INR980 (35x FY27E EPS).
Notable execution on record-high backlog
Q2FY25 revenue surged 80% YoY to INR4.62bn as OB continues to grow exponentially led by strong domestic transmission inflows along with rising exports TAM. While GM stayed largely in-line with our estimate of ~30%, better operational efficiencies led OPM to expand ~15% (versus 7.7% in Q2FY24/13.1% in Q1FY25). PAT jumped exponentially from INR16mn in Q2FY24 to INR453mn in Q2FY25.
Order inflows shot up 48% QoQ/228% YoY to INR10bn led by various sectors (including solar, private industries and utilities), thereby, expanding the order book to INR35bn. Click here for detailed KTAs.
Management call: Key remarks
i) Revenue guidance of INR20bn by FY25E with OPM likely to expand to ~17% by FY27E. ii) Enquiries worth INR185bn under negotiation and bidding stages. iii) Guiding towards reducing the working capital cycle to 120 days. iv) Targeting receivable levels of ~ 90 daysin next three years. Receivable days may look optically elevated due to INR1bn of retention money on utility orders. v) New facility for solar/green hydrogen IDT transformers is likely to be commissioned by Jan-25. The new facility shall manufacture additional 100 transformers/month at a realisation of INR12mn/transformer.
Variables to watch out for in near term
Given the resurgence in domestic power T&D coupled with new-age areas (railways, RE generation, green hydrogen and data centres), timely procurement of raw materials such as radiators, tanks, CRGO and bushings is key to ramping up execution. Watch out for timely order inflows from EPCs/central utilities, scaling up on the exports opportunity amid competition on LV transformers.
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