Reduce Transformers; target of Rs 135: KRChoksey

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26 Aug, 2025 12:21

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KRChoksey is bearish on Transformers and Rectifiers India and has recommended reduce rating on the stock with a target of Rs 135 in its August 09, 2012 research report.

“Transformers & Rectifiers India Ltd (TRIL) net sales declined by 38% to Rs. 85.2 cr as the company slowed execution. The company continued disappointment on EBIDTA margins front as it registered an EBIDTA margins of 3.4% in Q1 FY13 vs 10.1% in Q1FY12. Consequently PAT declined by 90.7% to Rs. 0.7 cr. Current order backlog stands at Rs 634 cr ( 20,959 MVA).”

“TRIL reported subdued EBIDTA margin of 3.4% in Q1FY13, a drop of 663 bps on a y-o-y basis as fixed overheads as a percentage of sales increased sharply on account of lower execution coupled with higher raw material cost. Interest and depreciation further eroded earnings as PAT decreased sharply by 91% to Rs. 0.7 cr. The company sales declined by 37.9% to Rs 85.2 cr as it sold 1,652 MVA of transformers vs 3,148 MVA in Q1FY12. The company slowed execution on account of delay in off-take from clients due to clearance related issues. As of Q1FY13 company had 371 MVA of finished goods as part of inventory. Order book for TRIL stood at Rs 634 crore and 20,959 in terms of MVA. Power transformers form the chunk of the order with 89% of the order book. The order book includes an order worth Rs 204 crore (10,000 MVA) from Power Grid Corporation of India (PGCIL) for the 765 KV class of transformers. PGCIL order’s are at wafer thin margins as TRIL has aggressively bid for this order as part of its entry strategy in the higher KV class transformers.”

“Pricing pressure in the industry continues to remain a concern and has not shown any sign of easing. Current order backlog includes PGCIL 765 Kv transformers order worth, which is expected to earn very low margins along with other thin margin orders. Considering the same, we recommend REDUCE on TRIL with a price target of Rs 135 (PE of 8x FY13E),” says KRChoksey research report. 

Non-Institutions holding more than 90% in Indian cos  

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