Transformers & Rectifiers India Q3 FY26 Results: PAT up 37%, On-track FY26 Guidance

Jan 11, 2026

1. India’s Largest Transformer Manufacturer

After facing temporary challenges in Q2, Q3 demonstrated a sharp recovery across all key financial and strategic parameters.
- Supply Side Normalisation: Shortages of key raw materials like Copper Transformer Conductor (CTC) and bushings, which delayed production in previous quarters, have normalised.
- Monsoon Impact: Recovered revenue deferred from Q2 due to monsoons
  - ~₹40 crores revenue could still recognised in Q3 and will carry over.
Progress on Infrastructure — Scheduled for commissioning in FY27
- Expected to expand gross margins by 200 basis points.
- Civil works for all facilities have commenced
- Equipment orders are firmly in place.

Revenue: ₹2,600 Cr — at least 25% growth over FY25.
Profitability: EBITDA margin of 16-17%.
Order Book: FY26 end order book of ~ ₹8,000 Cr.
- Expects strong inflow in H2

Backward Integration Schedule (FY27):
- CTC Plant: Targeted for commissioning in Q1 FY27.
- Press Board Facility: Expected in Q3 FY27.
- RIP Bushing Plant & Fabrication Facility (Phase 1): Targeted for Q4 FY27.
Capacity Expansion: — will increase total capacity to 75,000 MVA
- Changodar Facility: Completion is on track for Q1 FY27.
- Moraiya Facility: Expected to be operational by Q2 FY27

Goal of $1 billion (₹8,000 Cr) in revenue by FY28-29 — growth driven by:
- Expanding Product Segments:
  - Entry into the HVDC (High Voltage Direct Current) ecosystem.
  - TARIL aims to qualify for its own indigenous HVDC technology by 2027.
Margin Expansion — Backward integration and operational excellence
- Gross margins could eventually reach 35-40% by FY28.
Financial Health: Net debt-free within the next 18 months

TARIL anticipates a sustainable growth for the next 7-10 years
Expecting 15% CAGR in the Indian transformer industry.
Demand is expected to remain strong due to
- grid expansions
- rise of electric vehicles
- upcoming requirements for green hydrogen applications.
To mitigate commodity risks and ensure viability, TARIL has adopted a policy of limiting its order book to an 18-month execution cycle.

Revenue on-track for after a significant downward revision in Q2 FY26
- FY25 Exit (Q4 FY25): Management projected FY26 revenue of ~₹3,500 Cr
- Q1 FY26: Management reaffirmed ₹3,500 crore target
- Q2 FY26: Guidance revised downwards to ₹2,600 Cr
- Q3 FY26: Revised target of ₹2,600 Cr reaffirmed
  - supply side issues normalized
EBITDA Margin Guidance
- Q4 FY25: EBITDA Margins 16-17%
- Q1 FY26: Upgraded to 17-18%
- Q2-Q3 FY26: EBITDA margin target back at 16-17%
  - Impact of fixed costs on reduced Q2 FY26 revenue
  - Clearance of the final “low-margin”
Reaching ₹8,000 Cr in revenue by FY29 remains the core objective, supported by a planned capacity of 75,000 MVA and total backward integration

Current Market Price = ₹275 | Market Cap = ₹4,166.7 Cr

The impact of a weak Q2 which lead to a significant downward revision in revenue is clearly seen on both the stock price and valuations
At FY26 forward earnings, FY26 performance is already in the price
The valuations at $1 billion revenue target look very attractive but that is too far in the future

The $1 billion USD target is not fully priced in even thought is targetted for FY28-29
The demand tailwinds remaining strong for the next 7-10 years creates a long-term opportunity in TARIL
The backward integration which would drive margin expansion from FY27 onwards is not full priced in
In the short-term from a FY26 perspective — opportunities are limited.
- Those holding the stock would need to wait till Q4 end and review based on the guidance for FY27

Margin of safety in the short-term is quite thin as seen from the weakness seen in the stock price.
The thesis of TARIL is based on long-term targets — a weak quarter at current valuations like Q2 FY26 can seriously damage the stock price