10,000% return in 5 years! Buy this multibagger stock, say analysts post Q2 results

Transformers & Rectifiers India Ltd (TRIL) saw its shares hitting their 5 per cent upper circuit limit in Wednesday's trade, as a couple of brokerages retained 'Buy' ratings on the stock, following the company's healthy September quarter results. This is even as the scrip has rallied 10,000 per cent in the past five years.

Analysts noted that TRIL is undertaking an ambitious capacity expansion program, which will not only make the company India's largest transformer manufacturer, but also one amongst a few that has control of key inputs through backward integration.

"Given the unprecedented demand tailwinds, we maintain BUY rating on the stock with a target price of Rs 861 valuing the company at 35x 1HFY27E EPS," Antique Stock Broking said in a note.

The stock climbed 5 per cent to hit a high of Rs 707.80. It is up 195.66 per cent in 2024 so far, 325.02 per cent in one year and 1,127.39 per cent in the past two years.

TRIL reported a multifold jump in net profit at Rs 45.30 crore for the September quarter against a net profit of Rs 1.60 crore in the year-ago quarter. Its revenue for the quarter grew 79.4 per cent at Rs 461 crore compared with Rs 257 crore YoY.

Nuvama Institutional Equities said TRIL beat its Q2FY25 estimates by a mile powered by strong execution (up 80 [er cent YoY), lifting operating profit margin (OPM) to 15 per cent.

"New OI grew 3 times YoY to Rs 1,000 crore, jacking up backlog to INR35bn (executable over 15–18 months) even as tender pipeline is strong at Rs 17,000 crore (20 per cent strike rate). Management maintained FY25E revenue guidance of Rs 2,000 crore with Ebitda margin of 14 per cent-plus, expanding to Rs 4,500 crore and 17 per cent, respectively, by FY27E," it said.

Nuvama said HV power transformer manufacturers are seeing a Goldilocks phase of T&D cycle—high demand, coupled with short supply spurring premium pricing and margins. Factoring in higher margins and other income, it raised its FY25E/26E EPS estimates by 18 per cent and 3 per cent and suggested a ‘BUY’ on the stock with a target price of Rs 980 (35x FY27E EPS).

Arihant Stock Broking said TRIL has secured supply agreements with electrical steel manufacturers for the next three years and with copper suppliers for the next two years, ensuring stability.

The company will refrain from accepting orders for the additional 15k MVA capacity until it reaches at least 95 per cent completion. A positive cash flow from operations is anticipated by the end of this year, it said.