Transformer stock with strong guidance for FY25

India’s transformer market plays a crucial role in electricity transmission and distribution. One company worth considering is Megatherm Induction Ltd, specializing in manufacturing various induction heating and melting products, including transformers.

Financial Performance

• Revenue Growth: In H2FY24, Megatherm’s revenue increased by around 8% from Rs. 147 crores to Rs. 159 crores.
• Profit Surge: Net profits soared by approximately 63% during the same period, from Rs. 8 crores to Rs. 13 crores.
• Year-on-Year Comparison: Comparing H1FY23 to H1FY24, revenue jumped by 18%, and net profits magnified by 117%.

Current Orders and Expansion Plans

• Order Book: Megatherm’s current order book stands at Rs. 393 crores.
• Upcoming Orders: Inquiries from domestic and export clients are approaching finalization, totaling Rs. 90 crores.
• Capital Expenditure: The company is constructing a new shed, aiming for completion by Q4 FY25, which could generate Rs. 200 crores in incremental revenue by FY26/FY27.
• Strategic Goals: Megatherm plans Greenfield expansions, aiming for 3x to 4x revenue growth in 5 years. They also intend to enhance their global presence and launch new products.