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Five years ago, this company was just another low-key stock flying under the radar. Today, it is one of the best-performing stocks in the entire Nifty 500 index.



Transformers & Rectifiers India Ltd (Taril) has delivered a staggering return of over 16,000% over the last five years, transforming ₹1 lakh investment in 2020 into over ₹1.6 crore today. In the past year alone, the stock has surged nearly 60%, far outpacing the Nifty 500’s 7% gain.



So, how did a little-known transformer company deliver such jaw-dropping gains? What business and industry tailwinds powered such outsized returns? Is the rally over, or is there more to come? We track its journey.





Taril is the second-largest transformer manufacturer by capacity in India. Its clientele includes some of the largest power and energy companies in the country such as Power Grid, NTPC, and Tata Power.



Until 2021, the stock traded within a range as the company was stuck in a cycle of volatile revenues, thin margins, and inconsistent profitability. Sales barely grew and profits even dipped into the red in FY15 and FY16.



In 2021, the tide turned as the demand for transformers from the power and infrastructure sector surged. Sales finally broke out, jumping from ₹742 crores in FY21 to ₹1,158 crores in FY22. Net profit also almost doubled from ₹8 crores to ₹14 crores.



Since then, the company has restructured operations and improved capacity utilization, laying a solid foundation for growth. Over the past five years, Taril's sales have grown at a CAGR of 24%, while net profit has skyrocketed at an impressive 251%.



This explosive growth has not gone unnoticed. The stock has delivered returns of over 16,000% in five years, making it one of the top-performing stocks in the Nifty 500.



Institutional interest in the company has surged, too. FIIs, which didn't hold any stake in Taril as of December 2022, now own 11.3% as of March 2025. Domestic institutional investors (DIIs) have also upped their stake from just 1.89% in March 2024 to 7.22% a year later.





While Taril’s past performance has been extraordinary, the next growth chapter also looks bright. The company is targeting a revenue of $1 billion (around ₹8,553 crore) by FY28, up from its current revenue of $235 million ( ₹2,010 crores).



This implies a CAGR of more than 60% over the next three years. The management considers this goal well within reach, driven by a strong orderbook, capacity expansion, and long-term tailwinds in India’s power infrastructure sector.



The company expects its order book to reach ₹8,000 crores by the end of FY26. Its unexecuted orderbook stood at ₹5,132 crores at the end of FY26.



It has reiterated its focus on profitability, aiming to maintain net profit margins of around 10% and Ebitda margins of 16-17%.



The broader industry landscape is also highly supportive. India’s economy is projected to grow at 6.5-6.7% over the next two years, and the government's emphasis on infrastructure, capex, power sector modernisation, and renewable energy is expected to create strong demand for transformers.



The power transformer market itself is also poised for rapid growth driven by rising investments in power transmission, metro expansion, and renewable energy integration, which should drive sales further.



Also read: Defence stocks are soaring again, but can fundamentals support the rally?





Taril is undertaking a ₹550 crore capex programme over the next 15 months, with ₹400 crore planned for FY26 alone.



This investment will support both organic capacity expansion and backward integration and will be financed through internal accruals and its QIP proceeds ( ₹500 crores)



On the capacity expansion front, the company plans to increase its extra high-voltage transformer capacity by an additional 22,000 MVA, which will raise its total production capacity to over 75,000 MVA.



It also plans to add 15,000 MVA to cater to renewable energy and medium voltage market requirements.



With respect to backward integration, the company has recently acquired a controlling stake in Posco Poggenamp Electrical Steel, a CRGO (cold rolled grain oriented) lamination manufacturer with a 24,000 MTPA capacity.



CRGO accounts for around 33% of the raw material cost in a transformer, and with this acquisition, the company plans to lower its procurement costs as it scales up production over the coming years.



The company is also currently in the process of building a fully automated radiator facility, which can manufacture radiators for applications up to 765kV. Additionally, a state-of-the-art fabrication unit is expected to become operational by year-end, providing greater in-house manufacturing control and better margins.



The company has also entered into strategic technology collaborations across three critical component categories, to further reduce lead times.



These partnerships are expected to help the company achieve self-sufficiency, mitigate supply chain risks, and contribute meaningfully to its consolidated revenue over the next few years.



Also Read: IDFC’s growth hits a speed bump. Is the stock’s bounce-back at risk?





While Taril is well-positioned for future growth, the company faces a range of risks across its operations, supply chain, and market environment.



A major vulnerability lies in its dependence on critical raw materials like CRGO steel and copper that are both subject to price volatility.



The company also faces considerable supply chain risks. The overall transformer supply chain is described as global and complex and the industry has already faced significant challenges in the past with respect to production and delivery timelines.



Though backward integration and technical tie-ups are expected to mitigate this, successful execution will be key in ensuring the company does not face any issues in the future.



The competitive and regulatory landscape in India’s power sector also presents uncertainty. While government capex remains strong, any slowdown or delay in infrastructure rollout could affect demand.



Furthermore, TARIL’s order book is exposed to concentration risk, with over 50% of current orders linked to Power Grid Corporation of India. This dependence on a few large public sector clients heightens vulnerability to changes in procurement cycles or policy shifts within these entities.



Also Read: This lender to the railways is getting off track to get back on track





Over the last decade, the company's financial performance has been characterized by periods of volatility, particularly in its sales growth and margins.



However, the company has staged a turnaround over the last five years, on the back of domestic demand. FY25 in particular, has been the company’s best year to date, with the company reporting record highs in its revenue, net profit, and margins.



This resurgence is clearly reflected in its return ratios. Return on equity (ROE) of the company now stands at 17.3%, up from 2.2% in FY21 while return on capital employed (ROCE) stands at 25.2%, up from 14.3%.



The company has not taken on much debt in the past, reflecting a conservative approach to leverage. As a result, its debt-to-equity ratio has remained low at 0.1-0.2x.



However, this could change if the company chooses to raise debt to fund future expansion plans. For now, it appears well capitalized with about ₹172 crores in cash and cash equivalents and ₹500 crores from its QIP to carry out any capex.



On the operational front, working capital trends present a mixed picture. Inventory days saw a sharp spike in FY25 to 127 days, potentially indicating a build-up of unsold stock due to overproduction or supply chain inefficiencies.



Debtor days also stood elevated at 84.9 days. According to Ind-Ratings and Research, this is most likely due to delays in payments by some state utilities. For most government utility contracts, around 80% of the payment is received after 30-60 days of acceptance of the transformer, and the remaining after 30 days from the commissioning of the project.



However, the metric remains an area of concern and indicates that further improvements are necessary to strengthen cash flow consistency and reduce reliance on working capital.





Taril's rally over the past five years is a remarkable story of transformation, driven by sectoral tailwinds, improved operational metrics, and renewed investor confidence.



However, the road ahead demands flawless execution. Risks around capacity expansion, working capital pressures, and a concentrated order book could derail the company’s ambitious growth plans if not managed carefully.



Valuation is another key concern. The stock currently trades at a price-to-earnings multiple of 71x, well above its 10-year PE average of 31.8x and 5-year average of 52.6x. This suggests that a lot of future growth is already priced in, leaving little room for error.



While the long-term opportunity remains strong, investors would do well to temper expectations and monitor execution closely.



For more such analysis, read Profit Pulse.



About the author: Ayesha Shetty is a research analyst registered with the Securities and Exchange Board of India. She is a certified financial risk manager (FRM) and is working toward the chartered financial analyst (CFA) designation.



Disclosure: The author does not hold shares in any of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers should conduct their own research and consult a financial professional before making investment decisions.

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