Transformers and Rectifiers India Limited

Transformers & Rectifiers India Secures Export Order Amendments and Contracts from Linxon Global and Arcelor Mittal

Transformers & Rectifiers (India) Limited (TRIL), a prominent player in the transformer manufacturing industry, has received a significant amendment to an existing export order from Linxon Global Sweden, along with a new order from Arcelor Mittal Mexico. These developments contribute to the company’s robust order book, which currently stands at Rs 2,926 crore.

1. Export Order Amendment from Linxon Global Sweden:

1. • Original Order Details: The original export order from Linxon Global Sweden, valued at USD 14 million, included the supply of 18 Trackside Traction Transformers (20 MVA each) and 55 Trackside Auto Transformers (7.5 MVA each).
   • Reason for Amendment: Linxon Global Sweden has requested an amendment due to its internal policy, which mandates written authorization before any public announcements related to the order. This conditional Letter of Authorization (LOA) has led to the necessary amendments in the export order.

2. New Order from Arcelor Mittal Mexico:

1. • Order Details: TRIL has secured a new order from Arcelor Mittal Mexico, valued at USD 2.80 million. This contract involves the supply of a 175 MVA, 66 KV Electrical Arc Furnace Transformer.
   • Project Timeline: The completion deadline for this project is set for December 2024, indicating a significant timeline for the company to deliver on its commitment.

3. Company Performance and Market Impact:

1. • Stock Performance: Despite the positive order flow, shares of Transformers & Rectifiers India Limited saw a slight decline of 1.90% on Thursday, closing at Rs 713 per share. The stock recorded an intraday high of Rs 739.95 and a low of Rs 702.
   • Multibagger Returns: TRIL has been a stellar performer in the stock market, delivering multibagger returns over the years. The stock has surged by 485% in 1 year, 2,440% in 3 years, and a remarkable 9,040% in 5 years, making it a noteworthy small-cap stock for investors.

4. Company Profile and Growth Potential:

1. • Product Range: Transformers & Rectifiers India Limited manufactures a wide range of transformers, including power generation, transmission, and distribution transformers.
   • Financial Performance: The company has demonstrated impressive profit growth, with a Compound Annual Growth Rate (CAGR) of 57.2% over the last 5 years.
   • Market Cap and Ownership: TRIL has a market capitalization exceeding Rs 10,000 crore. Notably, Madhuri Madhusudan Kela, the wife of renowned investor Madhusudan Kela, owns a 2.09% stake in the company as of July 2024.

5. Investor Considerations:

1. • Order Book Strength: With an order book valued at Rs 2,926 crore as of June 30, 2024, TRIL is well-positioned for continued growth.
   • Potential for Future Gains: Given the company’s strong financial performance and the consistent influx of high-value orders, TRIL remains a compelling investment opportunity, especially for those tracking small-cap stocks with substantial growth potential.

Advantages of Recent Developments

• Strengthened Order Book: The amendment of the Linxon Global Sweden order and the new contract from Arcelor Mittal Mexico further bolster TRIL’s already strong order book, ensuring revenue visibility.
• Market Leadership: TRIL’s ability to secure and amend high-value international orders reinforces its position as a leader in the transformer manufacturing sector.

Disadvantages of Recent Developments

• Stock Volatility: Despite positive business developments, the stock price saw a decline, indicating potential market concerns or profit-booking by investors.
• Project Execution Risk: With significant orders and tight deadlines, the company faces execution risks, particularly in meeting delivery timelines.

Conclusion

Transformers & Rectifiers (India) Limited continues to demonstrate its market leadership by securing and amending high-value international contracts. With a strong order book and impressive financial growth, the company is well-positioned for future success. However, investors should remain vigilant about market volatility and the challenges of project execution.

FAQs

1. What is the value of the amended order from Linxon Global Sweden?

1. • The amended export order from Linxon Global Sweden is valued at USD 14 million.

2. What new order has TRIL received from Arcelor Mittal Mexico?

1. • TRIL has received an order worth USD 2.80 million to supply a 175 MVA, 66 KV Electrical Arc Furnace Transformer to Arcelor Mittal Mexico.

3. What is the current order book value of TRIL?

1. • As of June 30, 2024, TRIL’s order book stands at Rs 2,926 crore.

4. How has TRIL’s stock performed over the past five years?

1. • TRIL’s stock has delivered multibagger returns, surging 485% in 1 year, 2,440% in 3 years, and 9,040% in 5 years.

5. Who owns a significant stake in TRIL?

1. • Madhuri Madhusudan Kela, wife of investor Madhusudan Kela, owns a 2.09% stake in the company.

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