Transformers and Rectifiers shares: Nuvama maintains 'Hold' as slowdown in fresh ordering persists

Nuvama Institutional Equities has maintained a 'Hold' rating on Transformers and Rectifiers (India) Ltd (TARIL), citing a continued slowdown in fresh order inflows that could weigh on earnings visibility beyond FY26, despite a better-than-expected operational performance in the latest quarter.

In its latest note, the brokerage said TARIL posted a modest quarter, beating its revenue, EBITDA and PAT estimates by 4 per cent, 18 per cent and 8 per cent, respectively, aided by a 32 per cent year-on-year (YoY) rise in execution as supply bottlenecks eased, with operating margins holding steady at about 17 per cent.

However, the brokerage flagged continued softness on the ordering front. Fresh order inflows rose 5.4 per cent YoY to Rs 670 crore during the quarter. As a result, order inflows for the first nine months of FY26 were down 18.6 per cent YoY. While the company's order book remains robust at Rs 5,450 crore, equivalent to 2.7 times FY25 revenue, Nuvama believes the subdued pace of new orders constrains earnings visibility beyond FY26.

Management has reiterated its guidance to close FY26 with an order book of Rs 8,000 crore. It has also reaffirmed full-year guidance of revenue at Rs 2,600 crore and operating margins in the range of 16–17 per cent.

Nuvama trimmed its FY26 earnings per share (EPS) estimate by 3 per cent, factoring in lower other income, but retained its valuation multiple. The brokerage continues to value TARIL at 25 times FY28 estimated earnings, leading to an unchanged target price of Rs 334. The stock is currently trading at valuation multiples of 32x, 24x and 22x its FY26E, FY27E and FY28E earnings, respectively.

On the operational side, commissioning of the Changodar and Moraiya plants has been deferred to Q1 FY27 and Q2 FY27. Backward integration facilities, including CTC, pressboard and bushing units, are now expected to be commissioned between Q1 FY27 and Q4 FY27. Of the Rs 72 crore revenue deferral highlighted in Q2 FY26, around Rs 40 crore remains pending.

Separately, the company informed exchanges that Mukul Srivastava has resigned as Chief Executive Officer (CEO) with effect from January 7 due to personal reasons. Satyen Mamtora will take over as Managing Director and CEO.

As of September 2025, promoters held a 64.36 per cent stake in the smallcap firm.