The ESOPs can’t be ignored, isn’t it. They are real cost on the investors. If we take ESOPs as employee expenses, stock does look a bit more expensive, even after this correction. Isn’t it? Am I missing something in this view?
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I think the reversal kicked in around PE ~29.. noticed HFTs quite active at this counter, providing good liquidity to absorb the selling pressure.
As a newbie with relatively small experience, it’s hard for me to confidently say whether this -40% drop was a classic “snatch” by institutions or if there was some underlying factor I missed.
I didn’t spot any major negative news that justified the hammering… and similarly, no big positive news announcement for TARIL to bounce +25% in just 2 days already. It’s definitely a consolation after getting hammered throughout the month!
D- Invested, added a few over the past 15 days during the dip. Holding with fingers crossed for now.
Would love to hear from seniors – any insights on what triggered the panic/sell-off and if the quick reversal looks sustainable?
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Could someone explain why TARIL commands a higher valuation than Shilchar?
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Sharing my understanding below:
Valuation of TARIL
TARIL mentioned that there was a one off slow down in Q2FY26 and they have “learned the lesson” of missing on operational performance. So, the coming quarters are expected to cover this underperformance though not fully. So, you should not look at PE in that manner. A similar example was DataPatterns which mentioned that they had poor Q3FY25 and revenues will be deferred to Q4FY25. You can see how it panned out for the business and valuation. Similar for HBL Engineering etc. So, am expecting a similar play, of course, by placing a reasonable trust on management.
Hence, market is probable realizing that the action is about to come in Q3 and hence jumping in on bandwagon. Expecting more volatility (am not good in technicals).
Valuation of Shilchar
The current valuation of Shilchar is also fair. It is available at a reasonable discount considering “current” scenario. One of the aspect of undervaluation is that the utilization levels are at 90-95% providing very limited headroom for growth in volumes. A good thing is that they mentioned that their US customers are absorbing the tariff since there are not many alternatives. So, expecting the revenue to be flattish till they have new capacity coming up by March. So, Q3 and Q4 are expected to be more flat. The TTM annual revenue is already close to the FY26 target of 750 Cr. Hence the market might not want to give that growth premium now itself, given that the entire solar and power sector was in down turn. If you are investing for 12 months or more, this is definitely a good opportunity.
General view of the sector
I am overall bullish on transformer , T&D sector. In my view, electricity consumption is very low in India and as per-capita consumption increases, this will increase (AC penetration, EVs etc.).
India saw a major scale up on renewables in last decade, which is still not sufficient. The major thing holding it back is T&D, BESS and grid modernization.
With most Solar companies moving towards BESS, the T&D players are going to enjoy a sustained demand.
Disc: Above is my interpretation in a very simplistic view. Had invested in TARIL, Transrail and Indo Tech during the dip. Watching Shilchar.
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I barely have a surface level understanding of the sector so I could be wrong. However the way I see it, Shilchar has
- Higher sales growth in last 3,5,7 Years (But then, also valued richly in terms of MCap/Sales)
- Higher ROE-ROCEs historically
- Higher OPM-NPMs historically
- No pledged shares vs 21.8% for TARIL
- Minimal depreciation
- higher Asset Turnover Ratio
- +ve FCF vs Taril’s -ve FCF
- An efficient management that overdelivers
- Lower Inventory days, Cash conversion cycle (However higher WC days)
- 0 debt vs 366 Cr debt for TARIL
- Lower reserves (But, one that is rapidly increasing)
- The ability increase its capacity with minimal incremental capex.
Yet, TARIL seems to be always valued richly, attracting more DII/FIIs than Shilchar.
The following are some of the parameters in which TARIL may be scoring higher
- Product diversification
- The category of Transformers sold
- Higher Revenue (However one could argue Shilchar should have higher valuation bcz of low base effect).
Yet, none could explain the apparent dichotomy that exists b/w the two. Is it higher CFO/EBIDTA? More real world reputation? Technical edge? End user demand? Geographical edge? US Tariffs? More room for growth in terms of capacity utilization?
OR am I wrong in inferring that Shilchar has lower valuation?
Sources - Screener, Shilchar Valuepickr thread, Zerodha Daily Brief
PS - Interested in Shilchar, no position. Haven’t read any concalls or research articles yet.
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Q3FY26 Result & Concall Insights
Full-Year Guidance (FY26):
•Revenue growth: 25%
•EBITDA margin: 16–17%
•Order book target: Rs. 8,000cr by the end of FY26
•Unexecuted Orders are expected to get delivered within 24 months
•The company has intended to reduce its order execution cycle to 18 months from 24–28 months, improving efficiency.
Q3 Performance Adjustment:
•In Q2, around 70–72cr of revenue was deferred.
•In Q3, deferred revenue stood at about 40cr.
•The company benefited by approximately 30cr in Q3 on net basis.
•After adjusting for deferred revenue, top line growth stands at 26.35% YoY and 53.63% QoQ.
Capacity Expansion & Targets:
•The on-going capacity expansion will be completed between Q1–Q4 FY27.
•Once fully operational, the company expects:
EBITDA margin of 15-16% range and along with 200bps improvement through operational efficiency.
Revenue target of 8,000cr by FY28
•Expanded Capacity utilisation is expected to reach 85% by FY27.
Financial Position:
•The company’s cash position has turned positive, with around 32–35cr in cash and 275cr deposited in banks.
•Management reiterated to become net-debt-free within the next 18 months.
Order Visibility & Approvals:
•The company’s RIP bushing capacity has been approved by PGCIL, enabling it to receive future orders.
•After successful execution of repair orders from Power Grid, the company is expected to receive HVDC transformers order from PGCIL in FY28.
Transformer Market Outlook:
•Global transformer market is growing at a CAGR of 6.17%
•Indian transformer market is growing much faster, at 15%
Impact of Possible Entry of Chinese Companies:
•Recent news suggests the Indian government may ease restrictions on Chinese firms bidding for government contracts.
•However, the impact on the company is expected to be minimal, because:
- There is only one Chinese transformer manufacturing plant in India i.e. TBEA (Tebian Electric Apparatus Co Ltd) and its order book is already full for the next 18–20 months
- Any new Chinese entrant would require to go through stringent approvals process that takes around 12-18 months.
World Bank Issue:
The company is in process to reply on the issue and expect it to get settled in next 2-3 weeks.
CEO Resignation:
Mr. Satyen J. Mamtora, MD will take care of the leadership (CEO) going forward and will think about appointing new CEO if that will be required in future.
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If all things postive why the hammered nearly 10 percent today
I think CEO resignation is the main reason for this drop. Mukul Srivastava came from CG Power and market must be hoping that he will bring professional outlook to the company. He joined TARIL on 8th July 2025 and resigned on 18th Nov 2025 and relieved yesterday ie 7th Jan 26. It seems TARIL is going through the struggle many family run companies face while trying to bring in professional management. Its difficult for promoters to easily give away control. So I would not read too much into it. Only good news is that resignation is not sudden (company disclosed resignation letter post market hours)
Disclosure - invested and sold part of holding today post results
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I see 3 drags. would rate in order of impact. (Just guesses)
1.) Abrupt Resignation of CEO just after 6 months. Raises corporate governance red flags.
2.) Probably there came a news from some news agency that Govt planning to open up chinese companies to govt EPC contracts. Market though this would impact TARIL.
3.) too much Guidance revisions. From 3500 cr earlier in Q1 to 2600 by Q2, which means still they need to do some 872+ crores of business in Q4. And slow growth of Order Book.
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Why does the per MVA realisation of transformers go down as we move up the voltage class?
Inspite of good quarterly result the stock price of TARIL has been decreasing for quite some times. In my view, the following are the main factors behind the derating of the stock price:
- Expansion plan of Moraiya (**delayed from Q2FY26 to Q3Fy26, now further delayed to Q2FY27)**and Changodar (**Delayed from earlier guidance of Q2FY26 to Q4FY26, now further delayed to Q1FY27)**delayed time and again hurting management’s credibility and business growthà In my view, this is the biggest reason behind the fall in stock price.
2. Resignation of CEO dampened market sentiment
3. Rumors of govt permitting Chinese players: Management clarified that even if Chinese companies are allowed, they must manufacture in India, and the only such player, TBEA, is already fully booked with customers like Adani and Reliance, hence TARIL does not expect any meaningful impact on its competitiveness in the short or long term.
4. Stagnant Order Inflow: Q1:665 cr, Q2: 592 cr, Q3: 665 cr
5. A 25% YoY decline in the order pipeline (₹22,000 crore in Q4 to ~₹16,500 crore currently) and an 18.4% drop in 9M order inflows vs last year à management stated this reflects a deliberate slowdown in order intake to cap the order book within an 18-month execution window, avoiding long-gestation, low-visibility contracts
6. Status of Word bank debarment: Management clarified that TARIL is not debarred by the World Bank as of now, the company is submitting its formal response by 12 January, and expects the matter to be resolved within the next 2–3 weeks–> uncertainity hurts business sentiment
7. CRGO shortage issue still not solved and will be always in work in progress situation due to high demand of transformers in India.
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