Low valuation, strong growth: Is this transformer stock charged up for success?

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On 29 August 2026, Transformers and Rectifiers (TARIL) announced its first order from the nuclear power sector.
This is the kind of announcement that usually moves a small-cap stock, and TARIL has spent a year collecting such disclosures: a record order book, a giant order from Power Grid in July, quarterly order inflow above ₹2,100 crore, and now entry into the nuclear segment.
Despite this, its stock is trading at ₹302, down roughly 45% from its 52-week high of ₹552. This disparity makes the stock worth examining carefully. Let’s see whether it makes sense to add it to your watch list.
What is TARIL?
TARIL manufactures power, distribution, furnace, rectifier, and specialty transformers, as well as reactors and mobile substations, ranging from 5 MVA up to 1,000 MVA, and the 1,200 kV class. It operates on a business-to-business model, supplying the power generation, transmission, distribution, and industrial sectors.
The company is scaling rapidly. In FY26, it manufactured 33,000 MVA, up from 29,118 MVA in FY25, generating about ₹2,020 crore in revenue and ₹359 crore in Ebitda.
Its client roster features key players in Indian power infrastructure, including Power Grid, state transmission utilities such as GETCO and RRVPNL, and now, indirectly, NPCIL.
What explains its low price-to-earnings multiple?
At the current price of ₹312, TARIL stock trades at a PE multiple of 36, which is slightly below the industry PE of 37.
On an absolute basis, a PE of 36 times is not low; it’s a growth multiple. On a relative basis, TARIL’s current PE is below its own three-, five- and 10-year averages.
Over the past three years, the stock has traded at significantly higher multiples, delivering a compound annual growth rate of over 100%, but it has since experienced a sharp de-rating.
How strong are TARIL’s growth numbers?
The company’s order book is genuinely strong at ₹6,630 crore, a record of its own, and up 26% year-on-year. It is also close to three times its trailing annual revenue.
Its quarterly order inflow of ₹2,110 crore is substantial for its size, and the enquiry pipeline of around ₹23,000 crore is close to nine times annual revenue.
In July, the company disclosed an ‘ultra-mega’ order from Power Grid, a category it defines as ₹1,000 crore or above, with a 30-month delivery schedule. However, its earnings aren’t too strong. Revenue grew 8.1% year-on-year in the June quarter but fell about 27% sequentially. Net profit also fell year-on-year, and dropped roughly 31% from the March quarter.
For a company valued at more than 30 times earnings, a quarter with shrinking profit is a big deal, and the market responded by pulling the stock down.
Revenue was held back by lower capacity utilisation at Changodar while expansion work was underway.
TARIL is undergoing the largest expansion in its history, with total capacity set to increase from about 40,000 MVA to nearly 75,000 MVA across its Changodar and Moraiya facilities. However, during this phase, parts of the operational plant remain temporarily unavailable, reducing output and spreading fixed costs over fewer units.
Meanwhile, a ₹900-1,000 crore backward integration plan is projected to lift margins by 200-300 basis points starting in Q1FY28.
Backward integration is currently its sole operational growth driver. Even so, the company has set an ambitious revenue target of about $1 billion ( ₹8,300 crore) by FY28-FY29, a nearly fourfold increase over its FY26 revenue.
What does the nuclear order signal?
The Kaiga order TARIL recently secured is small relative to its ₹6,630 crore order book, and its exact financial value remains undisclosed.
Its real importance lies in the strategic milestone it represents. Kaiga Units 5 and 6 consist of two indigenous 700 MWe pressurized heavy water reactors (PHWRs) that will add 1,400 MW to the facility under India's fleet-mode expansion program.
Nuclear vendor qualification is hard to earn and provides a lasting competitive moat. With India approving ten indigenous 700 MWe reactors in fleet mode—and aiming to scale total nuclear capacity from roughly 8,200 MW today to 100 GW by 2047—every upcoming unit will require generator transformers, placing qualified suppliers like TARIL in a strong position.
What could go wrong?
Execution risks during expansion: Operating below full capacity while building new infrastructure requires TARIL to complete projects on schedule and ramp up utilization quickly. Any delays in commissioning would prolong the current profit squeeze. At a valuation of 30 times earnings or higher, investor patience will be thin.
Order book conversion and input price exposure: Transformer contracts typically span two to three years and are fixed-price agreements. This leaves TARIL vulnerable to cost spikes in key raw materials, like copper and cold-rolled grain-oriented (CRGO) steel, between order booking and delivery—fluctuations that directly erode operating margins.
Conclusion
TARIL is positioning itself for a significantly larger operational scale. Capacity is set to nearly double, backward integration is expected to expand margins from FY28, and a record order book provides revenue visibility for nearly three years. Additionally, securing nuclear qualification places the company in a strong position as India seeks to scale its nuclear capacity more than tenfold.
If Indian grid investment proceeds near its projected pace, TARIL’s strategic moves could drive substantial growth. However, the company is spending heavily ahead of earnings, current profits are under pressure, and its stock continues to trade at a multiple above 30 times. If execution falters, these same factors could quickly turn into downside risks.
As always, you should evaluate a company’s business quality, financial performance, management execution, corporate governance, and stock valuations before drawing any investment conclusions.
Happy investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com

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