Transformers and Rectifiers (India) Limited

Industrials — Electrical Equipment & Parts · NSE

₹329.80−₹3.65 (−1.09%)

DalalBaazaar Score

74 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:59 pm

Understanding the Business

Company site ↗

The 60-second version of Transformers and Rectifiers (India) Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Transformers and Rectifiers (India) Limited, together with its subsidiaries, manufactures and sells transformers in India.

IndustryElectrical Equipment & Parts

SectorIndustrials

Employees629

Annual revenue₹2,460 Cr

How does it make money?

Turns over ₹2,460 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹18 left at the operating level before interest, tax and depreciation. Each of its 629 employees supports ₹3.91 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹3.91 Cr

Who are its competitors?

The closest listed comparisons in its industry are SIEMENS LTD, ABB INDIA LIMITED, HAVELLS INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 24.4%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 20.5% against a peer median of 17.1% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE17.1%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 22.1% and earnings to grow about 26.1% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+22.1%

Est. earnings growth+26.1%

Analysts3

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +79% while net margin moved +262% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+79%

Margin effect+262%

DalalBaazaar Score

74/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of -0.27 — historically steadier than the index
✗ Small Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

82/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

71/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

32.5x

3Y Median

75.4x

40 monthly readings · mean 227.2x · range 29.8x–695.0x

Sector Median

88.8x

median of 3 sector peers

🟢Current valuation is approximately 57% below its 3y median of 75.4x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 63% below the peer median of 88.8x.

vs. its own history

Cheap

75.4x median over 40 months · -57%

vs. sector peers

Cheap

88.8x median of 3 peers · -63%

vs. generic bands

Fair

15x–35x

EV/EBITDA

23.6x

PEG

0.38

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 8.7% to 17.8% over 3 years.
Return on equity is rising
ROE has improved from 10.3% to 17.5%.
Return on capital is rising
ROCE has improved from 19.7% to 24.4%.
High return on capital employed
ROCE of 24.4% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

4 items require attention · 1 high · 3 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🟡Debt is increasingFinancial
Total debt is up 38% over 3 years.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹215 Cr in the latest year.
🟡Inventory building faster than salesFinancial
Inventory up 127% against revenue up 79% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 24.4% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 8.7% to 17.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 57% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 63% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 16% a year✓ 21.5% CAGR
Latest reported year was 60.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 16%✓ 17.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹215 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 21%✓ 24.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 3 neutral · 2 weak

Market Cap

₹9,899 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

32.5x

Fair

Fairly valued against the generic band

P/B Ratio

5.99x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹10.15

Profitable

Profitable on a per-share basis

ROE

20.5%

Strong

Strong capital efficiency

ROCE

24.4%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.34x

Low

Conservative leverage

Revenue Growth (YoY)

60.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

135.4%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.08%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹181 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

25.6x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

10.8%

Good

Assets are working hard

Operating Margin

16.4%

Good

Healthy core-business profitability

Net Margin

10.6%

Good

Strong bottom-line conversion

Current Ratio

1.70

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.27

Defensive

Steadier than the market

52W Range Position

40%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

291.1 / 294.3

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

70.0

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,372 Cr	₹1,264 Cr	₹1,988 Cr	₹2,460 Cr	+21.5%
EBITDA	₹120 Cr	₹138 Cr	₹332 Cr	₹438 Cr	+53.9%
EBITDA Margin	8.7%	10.9%	16.7%	17.8%	—
PAT (Net Profit)	₹41 Cr	₹44 Cr	₹214 Cr	₹264 Cr	+86.5%
EPS	₹1.54	₹0.82	₹7.21	₹9.07	+80.8%
ROE	10.3%	8.0%	17.1%	17.5%	—
ROCE	19.7%	16.3%	23.0%	24.4%	—
Total Debt	₹330 Cr	₹256 Cr	₹283 Cr	₹457 Cr	+11.4%
Free Cash Flow	₹18 Cr	₹13 Cr	-₹78 Cr	-₹215 Cr	—

🟢 Revenue has grown at 21.5% a year over 3 years.

🟢 EBITDA has grown at 53.9% a year over 3 years.

🟢 EBITDA Margin has risen from 8.7% to 17.8% over 3 years (+9.1 pts).

🟢 PAT (Net Profit) has grown at 86.5% a year over 3 years.

🟢 EPS has grown at 80.8% a year over 3 years.

🟢 ROE has risen from 10.3% to 17.5% over 3 years (+7.1 pts).

🟢 ROCE has risen from 19.7% to 24.4% over 3 years (+4.6 pts).

🔴 Total Debt has grown at 11.4% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹18 Cr to -₹215 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,666 Cr

Total Liabilities

₹1,123 Cr

Cash & Equivalents

₹8 Cr

Operating Cash Flow

-₹105 Cr

Capex

-₹109 Cr

Shareholding (proxy)

Institutional Holding

6.6%

Insider Holding

64.4%

Corporate Actions

Dividend Rate

₹0.25

Ex-Dividend Date

18 Sept 2026

Analyst Consensus

Recommendations

1 Buy · 0 Hold · 2 Sell

Target Price (Mean)

₹345

+4.6% vs CMP

Target Range

₹291 – ₹449

Peer Comparison

Company	P/E	ROE
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%
HAVELLS INDIA LIMITED	43.5x	17.1%

Recent News

2 positive3 mixed1 general

Better Transformer Stock: Voltamp Transformers vs Transformers & Rectifiers India

Equitymaster, 18 Oct

Transformers And Rectifiers Share Price Jumps Over 15% After Q2 Results

NDTV Profit, 14 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Transformers and Rectifiers soars 14% on strong Q2; stock up 28% in October

Business Standard, 14 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Transformers and Rectifiers Q2 FY27 result: Net profit skyrockets 135% YoY; order book inflow stands at ₹3,283 crore

Upstox, 13 OctOrder win

🟢Potentially positiveOrder wins add to future revenue, though the effect depends on the contract's size against annual sales and on when it is executed.

Transformers and Rectifiers share price jumps 14% after Q2 profit surges 135% | What should investors do next?

Livemint, 14 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

TARIL Q2 Results Watch Out: BSE 500-Listed Stock Crosses Rs 300; What Should Investors Know?

Goodreturns, 13 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability

MiddlingValuation · Risk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑