The power sector is poised for significant growth. Despite investing Rs. 111 lakh crore (US$ 1.4 trillion) in capital expenditures, with energy projects constituting approximately 24% of the total expenditure, an additional Rs. 33 lakh crore (US$ 400 billion) will be needed. Furthermore, by 2032, the sector will require 3.78 million skilled professionals to meet the increasing energy demands.
And it is a no-brainer that Power grids require upgrades to accommodate new clean energy resources, with transformers serving as a critical component of this modernization.
The industry has yet not reached its full potential as only 10% of the necessary work has been completed, leaving 90% of the transmission infra development still to be addressed.
Overview of India’s Renewable Energy and Power Sector Developments (2020-2030)
| CEA Distribution System Plan (2030) | Details | |
|---|---|---|
| Installed Renewable Capacity (Mar 24) | 210 GW ~46% of total installed capacity | |
| Capacity Growth (2024 to 2030) | Increase from 210 GW (Mar 2024) to 500 GW (Mar 2030).
|
| Power Sub-Station Development (2022–2030) | Details |
|---|---|
| Current Statistics (Mar 31, 2022) | 39,965 power sub-stations with 4,82,810 MVA capacity. |
| Planned Expansion (2022–2030) | 12,192 new sub-stations with 1,41,522 MVA capacity. |
| Cumulative Capacity by 2022–30 | 6,24,332 MVA (29.31% increase compared to 2022). |
India’s Energy Transition Capex Requirement FY24- 50E
| Category | Capex Opportunity (US$ Billion) | Capex Share (%) |
| Solar | 690 | 41% |
| Transmission | 524 | 31% |
| Wind | 188 | 11% |
| Pumped Storage | 101 | 6% |
| Battery Storage | 102 | 6% |
| Electrolyser | 63 | 4% |
Indo Tech Transformers: A Textbook Turnaround Story
Indo Tech Transformers is a compelling example of a remarkable turnaround. The stock price stagnated from January 2015 to January 2023, delivering a negligible CAGR of 0%. This period reflected the company’s lackluster financial performance, marked by declining revenues, weak margins, and consistent losses.
However, the tide began to turn in September 2020 when Shirdi Sai Electricals (SSEL), a leader in the transformer industry, acquired a 70% controlling stake. Subsequently, SSEL became the sole owner, spearheading a transformative revival in the company’s operations and stock performance.
Financial Comparison: Before vs. After
Revenue Growth:
- Pre-SSEL Era (FY15–FY20): Revenue remained stagnant, oscillating between ₹149 crore and ₹220 crore.
- Post-SSEL Era (FY21–TTM): Revenue surged from ₹206 crore in FY21 to ₹543 crore in TTM FY24, showcasing a strong growth trajectory.
Operating Margins (OPM):
- Pre-SSEL Era: Margins hovered in the negative or breakeven range, reaching a low of -6% in FY15.
- Post-SSEL Era: Margins improved significantly, climbing from 5% in FY21 to 14% in FY24 TTM, signaling robust operational efficiency.
Net Profit and EPS:
- Pre-SSEL Era: Losses were a recurring theme, with net profit hitting lows of -₹11 crore in FY17. EPS was similarly dismal, at -₹10.61 in FY17.
- Post-SSEL Era: Net profit rose from ₹6 crore in FY21 to ₹60 crore in FY24 TTM, while EPS grew sharply from ₹5.92 to ₹56.39 during the same period.
Share Price Performance:
- Pre-SSEL Era: The stock traded at ₹218 in January 2015 and fell to ₹208 by January 2023, reflecting investor disappointment.
- Post-SSEL Era: By December 2024, the share price skyrocketed to ₹3,019, delivering exceptional returns.
| (Rs in Cr) | Mar-15 | Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | Mar-21 | Mar-22 | Mar-23 | Mar-24 | TTM |
| Sales | 157 | 190 | 149 | 220 | 213 | 205 | 206 | 280 | 371 | 504 | 543 |
| Expenses | 166 | 191 | 152 | 221 | 215 | 203 | 195 | 258 | 335 | 435 | 469 |
| Operating Profit | -9 | -1 | -3 | -1 | -2 | 2 | 11 | 22 | 36 | 68 | 73 |
| OPM % | -6% | 0% | -2% | -1% | -1% | 1% | 5% | 8% | 10% | 14% | 13% |
| Other Income | 17 | 13 | 2 | 5 | 1 | 5 | 3 | 2 | 3 | 6 | 8 |
| Interest | 6 | 2 | 3 | 2 | 2 | 2 | 3 | 7 | 8 | 12 | 3 |
| Depreciation | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 |
| Profit before tax | -4 | 4 | -9 | -4 | -8 | 0 | 6 | 12 | 26 | 57 | 74 |
| Tax % | 0% | 0% | 24% | 0% | 0% | -1820% | 1% | 2% | 0% | 18% | |
| Net Profit | -4 | 4 | -11 | -4 | -8 | 2 | 6 | 12 | 26 | 47 | 60 |
| EPS in Rs | -3.52 | 3.79 | -10.61 | -3.47 | -7.9 | 1.81 | 5.92 | 11.48 | 24.2 | 44.12 | 56.39 |
Exciting Highlights from FY24!
Our Guestimate for FY25
On a conservative basis, Indo Tech Transformers is expected to achieve FY25 revenue of ₹800 crore, driven by ₹700 crore in orderbook execution and ₹100 crore in new orders. With operating leverage benefits, EBITDA margins are projected to exceed 15%, implying a significant 76% YoY jump in EBITDA to ₹120 crore (vs. ₹68 crore in FY24). PAT is estimated to double to ₹96 crore in FY25 (vs. ₹47 crore in FY24). At current levels, the stock trades at 36x and 23x EV/EBITDA on FY24 and FY25 estimates, respectively.
| Name | CMP (₹) | P/E | Ind PE | Market Cap (₹ Cr.) | PEG | EV/EBITDA | ROCE (3 Yr Avg %) | Asset Turnover |
| T R I L | 1061.35 | 131.82 | 65.18 | 15929.05 | 2.31 | 66.97 | 13.3 | 1.1 |
| Danish Power | 1131.1 | 58.6 | 65.18 | 2227.32 | 1.01 | 38.89 | 38.6 | 2.48 |
| Shilchar Tech. | 8145.45 | 57.62 | 65.18 | 6212.37 | 0.9 | 41.59 | 50.73 | 1.69 |
| Indo Tech. Trans. | 2986.55 | 52.97 | 65.18 | 3171.72 | 1.06 | 38.2 | 23.05 | 1.46 |
| Supreme Power | 224.3 | 38.21 | 65.18 | 560.55 | 0.35 | 26.06 | 40.94 | 1.33 |
| Volt. Transform. | 10224.15 | 30.13 | 65.18 | 10343.9 | 1.03 | 22.22 | 25.13 | 1.18 |
About Indo Tech
Indo Tech Transformers Ltd. is engaged in the business of manufacturing power and distribution transformers and various special application transformers, mobile substation transformers and substations.
Company Overview
Indo Tech Transformers Limited is engaged in the business of manufacturing Power, Distribution, Inverter, Convertor special application transformers, catering to various industries like Transmission, Generation, Hydro, Wind, Solar, Steel, Cement, Textiles, Utilities, DESCOMS, etc. Over 56000 Transformers of different ratings up to 245 KV are in service in various Substations and Industries across India and around the world.
Product Portfolio
Distribution Transformer– The company manufactures a range of Distribution Transformers suitable for use in Utilities and industries ranging between 100 KVA /11KV to up to 5000 KVA/33KV for residential, commercial, and industrial applications.
Power Transformers – It manufactures a range of Power Transformers between 5 MVA/33KV to 31.5MVA/132KV including two-winding, three-winding, and autotransformers.
Large Power Transformers– It manufactures Large Power Transformers in the range starting from 5 MVA/11KV up to 200 MVA / 230 KV including substation, generator step up/down, two winding, three winding, and Auto Transformers.
Skid Mounted Substation– It manufactures Skid mounted substations developed up to 5 MVA, 11 – 33 KV(HV) for windmills.
Clientele
TNEB, NTPC, ADANI, L&T, ABB, SIEMENS NLC, VESTAS, DVC, GAMESA, BGR, SUZLON, TATA PROJECTS, JSW steel, JSPL BALCO, Jayaswal Neco, etc. The company’s revenue from the top 10 clients accounted for ~61% of the total revenues in FY23.
Manufacturing Facility
Distribution Transformer – 1000 MVA
Power Transformer – 9000 MVA
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