Why did Transformers and rectifiers share price fall by more than 50% today?

Indian exchanges saw volatility as Sensex fell 1,950.67 points and Nifty dropped 649 points in a week, amid mixed global cues. Transformers & Rectifiers India Ltd, with a market capitalization of ₹12,096.68 crore, traded at ₹403 per share, down 5% from its previous close of ₹424.

Matter Explanation

Some investors panicked after brokerage apps showed a 54 percent drop in Transformers and Rectifiers’ stock. However, this decline is due to the 1:1 bonus issue announced on February 6, 2024, with a record date of February 14, 2025. The displayed prices are unadjusted for the bonus shares and will reflect correctly once credited to demat accounts. Investors need not worry, as stock prices adjust proportionally in bonus issues.

CRGO Steel Shortage

India faces a 30% shortage of Cold-Rolled Grain-Oriented (CRGO) steel, crucial for transformers and motors, due to delayed BIS license renewals. With domestic production meeting only 10-12% of demand, reliance on imports remains high. Urgent reforms, local production boosts, and strategic partnerships are essential to meet energy targets. 

Financial Insight

In Q3FY25, the company reported ₹545 crore in standalone revenue, a 49% YoY increase. EBITDA surged 136% to ₹87 crore with a 15.69% margin, while PAT soared 276% to ₹50 crore, achieving a 9.12% margin, highlighting strong operational and financial growth.

Also read: Penny stock hits 10% upper circuit after reporting 76% revenue growth & capacity expansion

Order Book

As of December 31, 2024, the company’s unexecuted order book stands at ₹3,686 crores, with ₹19,000 crores in inquiries under negotiation or bidding. Q3FY25 saw ₹631 crores in new orders, down from ₹1,000+ crores in Q2, reflecting a strategic shift toward high-margin projects with better payment terms.

Strategic Developments

The company achieved 100% backward integration by acquiring a controlling stake in a CRGO processing unit, reducing raw material costs by 4%. It secured three technological tie-ups to enhance capabilities and supply chain efficiency and progressed in PGCIL approval after a successful 500 MVA short-circuit test.

Capacity Expansion

The company’s 15,000 MVA capacity expansion project is on track for completion by Feb-Mar 2025, with order intake starting in Q1 FY26. It targets ₹3,500 crore in revenue in FY25 and aims to reach $1 billion in revenue within the next 3-4 years.

Market Position and Outlook

The management is optimistic about India’s energy sector growth, driven by infrastructure development opportunities. The company aims to sustain profitability by adopting a selective approach to order inflow, focusing on high-yield and quick-payment projects to strengthen financial performance and long-term stability.

Company Profile

Transformers and Rectifiers (India) Limited is an India-based company, which manufactures power, furnace, and rectifier transformers. The Company is a manufacturer of a range of transformers, which provides to both the domestic and the international market.

Written by Abhishek Singh

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