TRIL shares up 423% in 1 year but Nuvama sees 68% further upside! Here’s why

Nuvama Institutional Equities has initiated coverage on Transformers & Rectifiers India Ltd (TRIL) with a ‘Buy’ rating, even as the stock has climbed 423 per cent in the last one year. TRIL is one of the few suppliers of HV transformers in India and if one goes by Nuvama, it is poised to clock an 85 per cent-plus EPS CAGR over FY24–27!

Nuvama suggested a target price of Rs 575 on the TRIL stock factoring in a 25–30 per cent new orders growth; 13–15 per cent operating profit margin (OPM) (feeding into 85 per cent-plus EPS CAGR in its base case); and 25 times PE on FY27 EPS estimate of Rs 26.

“India’s ballooning power demand, fueled by manufacturing push and electrification, along with green transition (500GW by 2030) has triggered a revival in T&D capex (Rs 2.4 lakh crore in three–four years). Much of this is HV (220kv and above) for renewable energy (RE) connectivity. This, we reckon, would require Rs 36,000 crore in capex on transformers,” Nuvama said.

India’s transformer industry is five decades old with 300-plus players with capacity of 400GVA (180GVA two–three years ago). Much of this new leg of transmission capex is for >220kv long-distance RE connectivity. This implies accelerated demand for HV transformers, wherein six–seven players operate with entry barriers.

Nuvama said TRIL happens to be one of the few transformer manufacturers with offerings across the spectrum (

Nuvama said TRIL’s potential TAM (domestic and exports) is at Rs 39,000 crore-plus by FY27E. TRIL is following strategic initiatives, which may power its profitability and growth. They included frugal capacity expansion; backward integration to eliminate potential components shortage and strengthen supply chain resilience; and selective order picking for better cash conversion.

“We reckon TRIL shall clock an EPS CAGR of 85 per cent-plus over FY24–27E despite conservative assumptions of: i) 15–20 per cent market share driving 25–30 per cent OI growth/year; ii) slow OPM ramp-up to 15 per cent by FY27E (18–19 per cent in last upcycle); and iii) 25 times PE (peers over 50 times i.e. above +2 S.D.). Initiate TRIL at ‘Buy’ with a target price of Rs 575, implying upside potential of 68 per cent,” it said.

Nuvama’s bull case target of Rs 702 factors in 18 per cent OPM by FY27E with no incremental OI or higher multiple.