Transformers and Rectifiers (India) Ltd
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Transformers and Rectifiers (India) Ltd
Earnings Call Analysis
Q1-2025 Analysis
Transformers and Rectifiers (India) Ltd
In the first quarter of FY '25, Transformers and Electrifires India Limited (TEIL) reported a remarkable performance. Stand-alone revenue reached INR 311 crores, reflecting a significant year-on-year increase of 103%. The company's EBITDA rose impressively by 633% to INR 42.5 crores, resulting in an EBITDA margin of 13.6%. Profit After Tax (PAT) surged to INR 18.41 crores, indicating a staggering increase of 268% over the previous year.
TEIL reported an unexecuted order book of INR 2,929 crores as of June 30, 2024. The company secured new orders amounting to INR 698 crores in the quarter, showcasing sustained demand across sectors. Notably, they have 17,500 crores worth of inquiries under negotiation, primarily for power transformers and solar transformers, indicating a robust pipeline for future revenue.
For FY '25, TEIL is maintaining its revenue guidance at INR 2,000 crores, with EBITDA margins expected to be around 14%. Looking further ahead, the management anticipates standalone revenue to potentially reach between INR 4,500 crores and INR 5,000 crores by FY '27, with EBITDA margins improving to between 16% and 17%.
TEIL is focused on strategic growth initiatives that include backward integration, which is anticipated to add at least 100 basis points to their EBITDA margins. A new manufacturing capability for renewable energy products is set to begin production in December 2024. Additionally, TEIL recently raised INR 500 crores via a Qualified Institutional Placement (QIP), reflecting strong investor confidence in their growth prospects.
The company is optimistic about operational advancements with new manufacturing facilities planned to enhance capacity and efficiency. However, they acknowledge challenges related to raw material availability and government restrictions which might temporarily affect output. TEIL's commitment to resolve these issues is crucial for maintaining the growth trajectory.
TEIL is aiming to expand its export footprint, targeting 25% of its order book to come from international markets by FY '26. They have a strategic balance in their approach, ensuring that domestic opportunities are not compromised, thus reinforcing their position as a competitive player in both local and global markets.
During this quarter, TEIL was honored with an operational excellence award from Power Grid, underscoring its commitment to quality and operational efficiency. The successful export of a 220 MVA electric arc furnace transformer highlights TEIL's capacity to serve both domestic and international customers effectively.
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Ladies and gentlemen, good day, and welcome to Q1 FY '25 Earnings Conference Call of Transformers and Electrifires India Limited. [Operator Instructions] Please note that this conference call is being recorded. I now hand the conference over to Mr. Shubhadeep Mitra from Nuvama Institutional Equity. Thank you, and over to you, sir.
Good evening, friends. On behalf of Nuvama Institutional Equities, welcoming you all to the First Quarter FY '25 Results Conference Call of Transformers and Electrifires India Limited. We have with us today the top management of the company represented by Mr. Jitendra Mamtora, Chairman; Mr. Satyen Mamtora, Managing Director; and Mr. Chanchal Rajora, CFO and Adviser to the Board. I would now like to hand over the call to Mr. Satyen Mamtora for his opening comments. Over to you, sir.
Good evening, ladies and gentlemen. Thank you all for joining us on this earnings call conference call. We are delighted to have you here as we discuss the company's performance over the past quarter and the year ahead. Following on our Board meeting earlier today, we promptly released our financial results and investor presentation on the stock exchange.
We are particularly pleased with our order book position and the diverse range of orders secured throughout the year across various sectors, including solar power, private industries and power utilities. Notably, our new orders this quarter amounted to INR 698 crores.
Additionally, we have achieved a significant milestone with the major order of 4 STATCOM transformers of single fils, marking the first for an Indian company to be -- in the specialized segment. Our unexecuted order book as of 30th June 2024 stands at INR 2,929 crores. Currently, we have inquiries worth INR 17,500 crores under negotiation and bidding stage.
Looking ahead to the remainder of the fiscal year 2025, we have successfully navigated through phases of stabilization, turnaround and growth. We are now focused on consolidation, expansion and achieving sustainable profitability. We have implemented strategic growth initiatives across the organization, which are already reflecting positively on our performance. Our revenue targets for the year remained unchanged.
We extend our sincere gratitude to each participant for joining on our earnings call and for your continued support and trust. We hope we have addressed all your queries satisfactorily. Moving forward, we are excited about the upcoming milestones. New capacity for renewable energies will commence production from December 2024. Our fully automated rigor manufacturing facility will be operational from September 2024.
We have initiated journey towards backward integration to -- of critical components, exploring new avenues for organic and inorganic growth. Our revenue targets for current fiscal year remains steadfast. Furthermore, we are proud to have received an operational excellence award from Power Grid and to have successfully exported 220 MVA electric arc furnace transformer, one of the largest ratings ever manufactured globally.
Once again, thank you all for your participation and support. We look forward to your continued partnership as we progress into the next phase of our growth journey. With this, I conclude my remarks, and now I would like to hand over the call to our CFO, Mr. Chanchal Rajora Rajoda, for his comments and financial parameters.
Thank you, MD, sir, for providing an overview on the current quarter as well as the year ahead. I would now like to share some key financial highlights with our esteemed shareholders. Dear shareholders, I'm pleased to present the accomplishment of our company for the first quarter of FY '25, which has been one of our strongest first quarter in recent past years, marked by the substantial growth in the revenue and profitability.
Financial highlights. In quarter 1, our stand-alone revenue reached INR 311 crores, reflecting an impressive year-on-year increase of 103%. We achieved an EBITDA of INR 42.5 crores, a significant rise of 633% year-on-year basis with an EBITDA margin of 13.6%. Our profit after tax stood at INR 18.41 crores, showing a robust increase of INR 268 year-on-year with a PAT margin of 5.8%.
Our consolidated revenue reaches to INR 322 crores, reflecting an impressive year-on increased of 107%. We achieved an EBITDA of INR 46.22 crores, a significant rise of 65% year-on-year basis with an EBITDA margin of 14.3% at consolidated level.
Our profit after tax stood at INR 20.87 crores, showing a robust increase of 268% on a year-on-year basis with a PAT margin of 6.4% on the consolidated books. During the quarter, we secured the orders totaling INR 698 crores, highlighting our strong momentum in order inflow.
As of June 30, 2024, our unexecuted order book stands INR 2,926 crores. We are delighted to announce a significant achievement for our organization as a successfully raised INR 500 crores through a qualified institutional placement in just 3 weeks time marking a historic milestone in the Indian market.
This accomplishment not only underscores the strength of our business fundamentals, but also reflects robust investor confidence in our vision and the growth prospects. The unprecedented speed which we completed the QIP highlights our efficiency and ability in navigating financial market, further solidifying our position as a leader in the industry.
Throughout FY '25, we are -- we have placed significant emphasis on the people management and upskill initiatives, acknowledging the pivot role of our workforce in our success. We are focused on enhancing technical skill forecasting leadership readiness and improving overall competitiveness across our manufacturing, sales and engineering division.
Looking forward, we are optimizing about our prospects for FY '25, anticipating enhancements across various financial metrics. Our strategies are centered on achieving a streamlined balance sheet by reducing debtors and optimizing inventory management. Our ultimate aim is to transform into a debt-free company in the near future, supported by the clear and actionable plan already underway.
In conclusion, we are all well positioned to capitalize the opportunity within India's evolving energy sector with robust corporate governance, advanced technology, superior products and dedicated team. We are confident in our path towards the sustainable and profitable growth. I extend my heart full gratitude to our customers, the Board and management and particularly to our committed employees for unwavering dedication and support. Thank you very much, Chanchal. Shubali?
Moderator, we can start Q&A session, please.
[Operator Instructions] The first question is from the line of Mohit Kumar from ICICI Securities.
Congratulations on a very, very good set of numbers.
So my first question is, can you just talk about the opportunity landscape, the breakup of INR 178 billion orders under negotiation. Is it possible to break this into power transformer and distribution transformers? And any time lines and expect this order to get finalized?
So most of this would be -- let's say, 95% of this would be in power transformers and solar transformers. Remaining 5% would be distribution transformers.
And is it fair to say that we're talking mostly about interstate transmission system in India?
Yes, we are talking about mostly about interstate transmission systems in India?
And my second question is, can you talk about the reactors order book? It has grown massively in the last 2, 3 years. Is it primarily for high voltage? And any color on the competition on the reactors will be very, very helpful, yes.
See, as far as the reactors are concerned, there are very few players, high volt players are there in the game who are manufacturing base and who have the technology for manufacturing reactors. [indiscernible] Reactor is going to go primarily because of the renewable energy, which creates a lot of harmonics and then it's to be filtered and then it will disrupt the grid to stabilize the grid, you need the reactor.
So it is now just like if I see the recent orders with one transformer, there are about 2 to 3 reactors, something like that. So requirement of reactor is increasing like anything. And it is also -- they are intending to increase the capacity of the reactors much above today's limit of 110 MVA, MVR for 765 kV transformers and 125 MVR 3 phase for 400 kV transformers. They are going to increase it to improve the efficiency and to also reduce the cost -- overall cost of the reactor.
So is it fair to say that the reactors will still be around INR 700, 000 crores per year market? Or do you think we're much smaller?
It will be something like that. It will be something like that.
Understood. My last question, sir, when do you expect to see your IDT transformer booking starting? Is it fair to say that we can see some amount of booking in Q2 or Q3, Q2?
See, we have -- I mean, we are forced to accept some orders from some of our valued customers. We can't deny them. But we are going to atomize -- automatize the production of the IDT transformers, not only to reduce the cost, but also to improve the operating efficiency so that we can deliver something like 100 transformers per month.
This is our ultimate goal, and we are getting ready for that. We have ordered the machineries. We have started the construction for the new bay. It's going to be exclusive bay for manufacturing IDDs for the solar plants, smaller transformers approved 15 or 16 or 18MVA.
And besides that, some special transformers will also be produced in that, which matches -- the compulsion will be the restriction of the crane and the height of the crane. So whatever we can do in that, we will do it, which includes transformers like rectifier transformers and also for the upcoming hydrogen projects for which we have started getting the inquiry, we have manufactured one for GE USA, and we have supplied to them. So many more orders are going to come from there.
The total requirement is something like 2,300 transformers in a year for just only for hydrogen projects, you say electrolyzers. So electrolyzer, the rectifier and the transformer. We'll be supplying only the transformer. Rectifier part will be supplied by somebody else and electrolyzer will be their own make or maybe they may outsource them, like they outsource rectifier -- and this is the main.
Are you expecting something like 30, 40 GBA of IDT market for -- in India for the next couple of years? Is it fair to assume that?
Very frankly speaking, we have not really worked on that. But there are ample of business like we were talking to [indiscernible] , they need about 1,000 transformers in a year. Similarly, companies like Renew, the companies like ECMAY, they also require that. And recently, Avada. Avada also, they require something like 700, 800 transformers. These transformers will be costing around, if I'm not mistaken, about INR 1.2 crores.
INR 1.2 crores.
INR 1.2 crores. It's something like that. So it's a huge opportunity. It is only based on how reliable you are and how quickly you deliver because everything is based on your delivery time. So we are trying to set up the plant for manufacturing 100 transformers in a month. So that means about 100 transformers in a month, 1,200 transformers in a year. So almost 4 transformers a day. So it is -- we can easily do that. We have done that in the past for Adani. -- we can do that. It's not a big thing.
The next question is from the line of Ganeshram from Unifi Capital.
Yes. So just if you could help us understand in connection to the previous question. So as for IDT, the capacity that's coming in, I think you mentioned in September 2024, like what's the competitive landscape like for this particular product? And then do we see any impact on the margins on the positive or downside? Maybe that's the first question.
So the new plant will be operational by start producing transformers from the new plant in December 2024. And competitors -- there are also competitors there. But with the kind of situation, everybody is either booked or they have enough to supply the transformers. So there is no such undercutting for the price on the transformers.
Got it. Got it. And just to sort of understand how the realizations and margins compared to our existing product mix and -- yes.
The realization will be very similar to the current product mix. There should not be any change positive or negative towards the realization of this -- on this new transformers that we are manufacturing.
The next question is from the line of Subhadip Mitra from Nuvama.
Yes. So my question is, firstly, just clarifying on the guidance. If I remember correctly, I think your previous guidance for FY '25 was sales of INR 2,000 crores for full year and around 14% EBITDA margins. Are you still maintaining the same guidance?
Subhadip, if you just heard our opening comment of Satyen sir, he has clearly mentioned that our revenue guidelines remains in the same line. So we will be INR 2,000 crores is quite achievable, and we are working on that. And EBITDA margin will definitely will be on your expectations.
Understood. And similarly, if one is to take, let's say, a view 2 to 3 years down, what kind of, let's say, revenue growth over a 2-year period and, let's say, target margins over a 2 to 3 period -- 2- to 3-year period would you be looking to target or achieve?
Subhadip, next 3 years, we are well poised to reach INR 4,500 crores to INR 5,000 crore numbers on a stand-alone basis with the EBITDA levels of somewhere 16% to 17% levels. And we also see a better growth in our consolidation books in terms of the numbers because of the backward integration and backwards what we are doing.
Understood. If you could also help us with an update on the acquisitions that you were targeting to do as well as the backward integration?
Okay. Subhadip, we have raised the QIP in last month, and there are certain objects we have mentioned in our PD. And we are working on that direction. And I'll make you sure that the funds will be utilized only for those purpose. And soon, we will be starting working on those directions.
We already started working on the backward integration side on the fabrication unit as one of the largest fabrication unit, we are working on that work has started on that part. And on another side, we are working on that. And when the right time will come, we will definitely announce that.
Understood. And lastly, I think, sir, mentioned that we are looking to have the new facility having the ability to manufacture a large number of transformers on a monthly basis. So that is going to come from the new factory, which is expected by December '24?
No, we are expanding our Chande plant. So the December 2024, Chande plant is being expanded to include solar transformers and green hydrogen transformers.
Understood. And the ability to do 100 transformers in a year that will be from which [indiscernible] .
Yes, yes, yes. This new facility, what we are making in Changhooar, you missed last month May visit actually. You would have seen by yourself the progress there. So we are expecting somewhere between 12,000 -- 12,000 to 15,000MVA yearly basis from there. So as the Chairman sir just guided that 100 transformer of 15MVA range will not be a big thing from there.
The next question is from the line of Gunjan Kabra from...
My first question is that there are some news articles stating that INR 44,000 crores of transmission projects are getting delayed by PGCIL. There are 18 projects getting delayed by 32 months and 8 projects getting delayed by 12 months or so.
So what's your sense on the delay because that might delay the execution, though it's the need of the hour and demand for transformers is really good in the industry. So is there a delay in the execution on the transmission side? And how can it impact us in terms of execution, if you can guide?
See, this is a report which we have read today in the paper about the trouble they are facing for executing the entire project as they have promised because of the availability of the fund. But I think with PGCIL, there are other private players also like Adani and Tata Power and Sterlite. So they will be pushing in to get these orders.
Now so far, whatever orders have been placed are mainly from the orders which we have received are mainly from Power Grid. Now they may have been -- I don't know why they are of the opinion that there may be -- they may stole some of the projects but I don't see that.
The kind of the -- what should I say, the feeling which we get from them, they are even now trying to get into 1,100, 1,200 kV AC lines H 2 or 3 of the 765 kV lines, they will be converting to over 400 kV lines, they will be converting to 1,150 kV lines and their code for the meeting of the stakeholders to see their response, whether they will be ready with this.
So our person was the same thing that if there is no enough order investing for 1,200 kV transformers separately will be a big challenge. But we need some clarification from them how much transformer they are going to require. And on the basis of that, people will come out with the facility because it is to be manufactured in the same facility, but they are going to be much larger transformers than what they are buying today.
It will be a bank of 3,000MVA single bank as against today, what they have is 1,500MVA. So 1,500MVA to 3,000MVA is a big jump. But the problems will be faced in transportation also because each transformer will be weighing something like 425 to 450 tonnes.
So transportation well that the bridges which are built are in a position to take the load or they will have to have a separate route for that, something like that. So these are the challenges, but this is going to come by 2027. That is what they are expecting. So I don't think there will be a slowdown as mentioned in the paper today, the news -- small news which has come. I don't know why, but we are not getting any filling like that from power grid.
On the contrary, we are being -- we are having meetings with them every weekly on our dispatches and how we are going to meet their targets. So in fact, they are pushing us to do more. So it is on the contrary, what is being said in the newspaper today.
Okay. So you think there is no -- there is not much delay in terms of not only PGCIL, sir, but other ways also on the transmission side because there are a lot of external factors also for them to get it executed. So is there anything where we are not only from their side, but on the other fronts also might be a delay in execution? Or are we on track because...
We are very much on track.
Very much on track.
G, if you are good, there is one more thing I want to add that a week back, if you have seen the news article where the central government has basically instructed power utilities to enhance their CapEx on the T&D sides.
The enhancement CapEx guideline is already there and there is going to be a huge demand, but that is there. I'm not denying that. But just on the execution front because you are into this business day in, day out, so you might know a little more -- a little better than what all of us know.
So just wanted to gain an insight because this is a need of the eye that's there. I mean, because the generation is happening, transmission has to be there. So my second question is, what is our strategy in terms of the export market comparatively because there are high numbers on the transmission side of what U.S., Europe and Africa are going to spend on the transmission. And so are we -- what's the strategy going forward for the exports? And I guess, comparatively, margins are also a little higher, and we have got some approvals. So how are we seeing the export market going forward?
Gunjan, if you have been tracking our calls and investor calls, our investor interaction, we have been always guiding about the export strategies that how we are focusing on the export market. Also, we have mentioned in our various calls that we have a target of reaching 25% of order book by end of FY '26.
And we are working on that direction. We have our full-time employee based out of, you can say, Europe. We have our agents across the countries, and we are increasing our footprint, and we have significantly actually enhanced our export team. So we are working on that direction.
But in the same time, we don't want to lose our Indian customers or Indian opportunities just in order to have the export market, which will give the room to the other people to enter where we are strong. So we are balancing and working on both the sides. And as right is that FY '26, you will see 25% of our entire order book will be from the export side.
Okay. Got it. Sir, the third question is when we talk about we are getting backward integrated like into tanks, radiators and bushings and core CRCO. So what kind of an EBITDA margin, like how much of that supply is right now captively used? Are we sufficient in terms of our capacities, but though we are enhancing it as well.
So likewise, if I see a power transformer company manufacturing transformers plus with you guys manufacturing with backward integration. So what kind of margins can we see because tanks and all are also 8%, 10% EBITDA margin business. So what kind of a margin expansion or maybe likewise, what's the difference that we can see if we compare 2 players with backward integration and not backward integration?
See, there is a misconnect there. Today, if you see the EBIT margins in the tank manufacturers, it is more than 25%. Yes, it's huge because there are no availability of the tanks in spite of so much of requirement of the tank. So everybody is struggling to get the tanks at whatever price.
The tank, which we are getting at INR 110 today is costing me INR 160. And if I go for export of those tanks, it will be more than INR 350 a kilo, taking into account 20% as these transportation goes from here to America. Still, you will make a huge profit. So -- and the plant which we are thinking about or which plant we intend to have is going to be more of automatic with less manpower, and it is going to be the largest plant in the world for tank manufacturing. It is going to be the largest, I mean it. So there are no such facilities to have such a huge capacity plant for manufacturing transformer tank.
Okay. Okay. And sir, what kind of INR 17,500 crores is the order inquiry pipeline that we have? So what part of that can be addressed in FY '25 in terms of tenders? Any idea on that?
Gunjan, look, the inquiries, order generation is a continuous process of business. Inquiries that keep coming and getting materialized on the order side. So it's a continuous process to us. And as you see that every year, we are increasing our order book significantly, right?
There is a robust increase as compared to the FY '23 to FY '24. And there is -- it is going to be the significant increase in the FY '25 order book also. So I can't tell you that how much percentage and all this, but we are working on the guided guidelines and where we want to reach 2 to 3 years down the line. Just to add up some of your questions about the backward integration. The backward integration is going to add at least 100 bps in my stand-alone books on the EBITDA margin levels minimum.
.
The next question is from the line of Sarvesh Gupta from Maximal Capital.
Congratulations for a decent set of numbers. Sir, in this quarter, we have seen some slowdown on a Q-o-Q basis. So were there any factors which led to that because we were thinking that because the buying and the demand has been very strong, so you will be continuously sort of fulfilling and booking the orders also in this quarter as well?
Sarvesh, basically, it's not the slowdown. It is basically the deliverables, right? There are certain numbers we have to deliver in a certain time period. So these numbers are what we -- are based on that. And there is a -- there are -- there is a slightly -- you can say that crunch on that because there were a small delay into the CRIO supplies because of the BIS restrictions by the government of India sites.
But by and large, basically, our revenues are now depending on the deliverables in every month. And we are working on those directions that whatever is the marketing requires the numbers to be delivered in a monthly basis, we will deliver on those lines.
Okay. Did you see any impact of the elections on the deliverables in this quarter?
No, no, no, no. There is...
Its quarter 1 is always like this, Sarvesh.
Okay. And this INR 4,500 crores to INR 5,000 crores in stand-alone revenue that you expect, this is FY '28 sort of a number, right?
FY '27, it's 3 years.
Within the next 3 years. So INR 2,000 crores and then INR 2,000 crores should become like INR 4,500 crores in FY '27.
Yes, sir.
Okay. And what is the expected order inflow sort of a guidance for this year?
Sarvesh, if and when the order comes, we keep basically announcing that, right? Yes. But we will be having much, much higher order book what we had in March 31.
And from a constraint perspective, like, of course, there's a lot of demand. And I think, as you rightly said, customers like Power Grid are also pushing you to sort of do more. So what are the constraints that we are seeing currently in terms of fulfilling the demand? And how do we manage that?
Currently, there are some regulations and there are some -- see, transformer industry had built up over the last 10 years. But unfortunately, the raw material suppliers could not build up on that. And there is with the sudden increase in raw material and with some restrictions from the government of India. We are facing a little problem in attaining the raw material and which is being sorted out as we speak.
So raw material and the pricing of the raw material would be one thing. But in terms of other things like building a new facility, are you seeing any constraint in terms of procuring because the time lines for those machineries might also go up given that a lot of players are planning to ramp up at the same time.
The way that is all lined up. So there are no issues there. We have a commitment from them. And they are genuine suppliers, so we don't worry about it.
Okay. Because we've been hearing...
December 2024 that our plant will be functional. It is because we are aware -- we know that our machines will be delivered by November 2024.
Understood. And sir, finally, if I may ask one more question. So earlier and now, I think for the same level of revenues also, we are doing much better margins. So is it because the pricing have gone up or something else which is sort of playing because there is too much demand, so the transformer...
The pricing has gone up as well as because of operational expenses that we are working on, both are building in the factor on the profitability.
But mainly, it would be like -- because earlier when you -- we used to do INR 300 crores, we used to get like 7%, 8% margin. Now we are getting 12%, 13%, 14% margin in the same sort of scale. So what is the primary contributor here, sir?
Sarvesh, to understand a bit, we need to understand the customer mix, what we had and what are the opportunities were existing at that time. There were very limited opportunity existing in the transformer industry in 2 years or 3 years down the line, whereas the opportunities are immense and the customer network and customer base is different.
So this -- earlier since we -- the majority of the customers were the state utilities and top of that, the suppliers were more, so cut competition was there. And as a few minutes back, the MD sir has stated that there is ample demand for everybody. So there is no dearth of the orders.
So nobody is going and cutting the pricing levels, right? So the prices have better up in last 1 year, 1.5 years' time as well as the operational excellence also efficiency also has increased in our organization. And both are contributing on that point. If my MVA production increases, definitely, my operational efficiency increases and my margins are increasing. So these 2 factors are in combined contributing in this.
Understood, sir. And now that many of the producers are also sort of exporting up to, let's say, 20%, 25% of their top line, so now given that there's a lot of demand in the domestic segment itself, but of course, the export, I would say, would be more lucrative in terms of margins.
But do we feel a risk of a government intervention in terms of our export because the domestic demand might feel -- might get somewhat delayed because everyone wants to export much more because margins are higher?
Sarvesh, well understood it, understand that the product which are getting exports and products which are basically required in India at this moment are not on the same line. Majority of the products which are getting exports are either the specialty transformers or the solar IBT transformers, whereas in India requires more of the high-voltage power transformers. So we don't see any such kind of the intervention from the government.
And also, if you just noted when I was replying to Gunjan, I said very category clear that we are not running for the exports. We will be basically allocating our additional quantities to the export market. So these things, we don't see that it is coming into the picture.
[Operator Instructions] The next question is from the line of Shrinidhi Karlekar from HSBC.
Congratulations on great set of numbers.
Sir, just wanted to know, do you guys manufacture traction transformer? And are you guys seeing opportunity coming from the Vande Bharat train set traction transformer?
We are working on certain projects. The STATCOM transformers that we are -- currently, we got orders for are for the Vande Bharat program of Vande Bharat trains.
Right. So those are for Vande Bharat. And are the same the traction transformer?
We see there are 2 types of traction transformers. One is what we say trackside transformers and one is which are used in the engine itself. So we are not into the transformers which are used under -- in the engine. We are on the trackside transformers.
Trackside transformer also, they have now come out with a special transformer called Scott-connected transformer where they change the line or they convert the line 3-phase line to single-phase line to supply to the railway. And 3 -- when you have a 3-phase transformer like the 3-phase single phase 2-phased transformer, it decreases the transmission line cost for the railways.
So there are major advantages and then they balance it in such a way that not a single line is overloaded because it's all trackside transformers. So the supplies required by the railway trains is single phase. So you have to have a single phase line. And if you run only single phase line, there will be chaos in the system.
So they have a 3-phase to 2-phase line, which supplies power to the engines or to the railways. So we are into trackside transformers. We are also into scot connected transformers. And now as Satyen said, we are also -- we got the order for StatCom transformer, which stabilizes the line. They are mainly used for stabilization of the line so that unequal voltages reduces and no disturbances in the system.
And sir, the STATCOM transformer that goes into grid application, are you present in that market?
Yes, we are.
The next question is from the line of Amit Mahawar from UBS.
Sir, congratulations on great results. I just want to understand, we also deal with global players like GE, Hitachi, et cetera, right? Broadly, we have made supplies to them, both in India and maybe globally. In FY '24, can you broadly share what percentage of our sales comes from supplies to some of the global peers?
Amit, I would basically request you to go to our FY '24 investor presentation. So you will get all the details in that, sir. which is available on the stock market and our website.
Okay. Fair. Value of '24. Okay. Fair point. Second question, sir, is on the export opportunity. Now globally, China used to be one of the largest suppliers to the West, almost USD 5 billion at the peak exports of Chinese transformers globally, which is not the case right now. They don't get proper reception audience on the Western grids because of various issues, including security.
So what is the total opportunity for the domestic transmission equipment players, if I right now foresee, particularly from maybe developed markets, if you have that assessment, sir?
So Amit, we would be doing around 25% of our turnover in exports and not beyond that. So -- and there are enough opportunities that we are looking at in terms of exports in Europe and in U.S. So pretty much 25% is achievable.
Okay. Okay. So you're saying broadly in 3 years' time, around INR 1,000 crores is what you are looking at?
Yes.
Amit, if you want to understand more about the global market scenario, any time you can connect me, I can guide you on that.
The next question is from the line of Nikhil Abhyankar from ICICI Securities.
Sir, I wanted to understand about this Scott transformer. So is this kind of a onetime event that the railway is undertaking? And what kind of total market -- what is the TAM for this product?
Nikhil, see, they are increasing the speed of the trains, right? So whatever are the transformers besides the new tracks which they are building, they need to change the transformer because with the existing transformers, which are smaller in size, which were taking care of average speed of the train to be 70, 80. Now we are talking about an average speed of 120 to 140. So these transformers are to be replaced immediately.
So the railway is in a short supply for the transformers. They are looking for the good vendors, and they are doing everything to ensure that their program for electrifying the lines or increasing the speed of the train does not hamper. So they are in a big way into this. And we are getting the opportunities every now and then from the railways for this.
Besides that metros, just look at the metros. Metros are coming up everywhere and they are expanding so much, like almost like 80% of the transformers used by metros in Delhi are ours. Ahmedabad is 100% ours, Coach in 100% ours, Goa is ours. So we have been established as a major player in the transformer also for the metros. They're similar to what you require for the trains. They are a little smaller, but they are almost the same.
And Nikhil, seeing the size of railway, onetime opportunity in railway will be how large you can analyze yourself even if it is there.
Sir, we did some math and we came out with an opportunity of somewhere around INR 5,000 crores. So is that fair? Or will it be higher than that?
We will be not able to answer you this question, if the Railway Ministry can give you this answer.
Sure, sure, sir. Okay. Sir, and just to understand the market for the solar renewables. So is it fair to assume that 1 gigawatt of, say, solar Ri will require 1 GP of IDT transformers? Will it be more or less?
It will be more than that.
It will be more than that.
A little more than that, yes. What happens is IDT maybe 1 GP, but 1 GP you require for evaporating the power to the grid. 1 GP of power you require of transform minimum little more than that...
Because they don't want to get -- I mean they don't want to have any outage during the operation. So they prefer to have a little larger transformer than they require.
The next question is from the line of Mayank Bhandari from Asian Market Securities.
Moderator, can you just please take the next 2 or 3 questions maximum and one question from each, please.
Sure, sure.
Sir, I wanted to know what would be the CapEx for this year for the expansion you are doing into Chandudar? And as you have given now the guidance for next 2 years, the revenue should reach to almost INR 4,000 crores. What is our CapEx guidance for FY '25, '26 also?
Mayank, for the current year CapEx guidance, we have already given in our QIB documents. You can go through that and you can get the details from that. And for -- sorry, FY '25, '26, we don't see any CapEx requirement as of now. It's pretty early for that.
The next question is from the line of Pradeep Singh from Finterest Capital.
My question is already answered.
Should we take the next question?
Yes, please.
So the next question is from the line of Chinmai Kabra from Emkay Global Financial Services.
Congratulations on a good set of numbers. Just really wanted to get a sense of the inquiry pipeline of INR 175 billion. Like if I could maybe get a breakup on a sectoral level. I mean, what is the opportunity size that we would be looking from the solar and the green hydrogen transformers that we are going to be manufacturing going ahead? So just the market size, if any fair understanding of that?
Chinmai, currently, we are only taking a few -- we have only taken a few orders from select few customers of ours who have been very loyal to us. But among this INR 17,500 crores order inquiries, none of them are from solar. Solar, we will only start going after the first half.
We will start going to people only after the first half once we are towards the function -- fully functional plant, we'll start quoting to customers for solar transformers. So you can expect after September, we will start quoting to -- for solar transformers.
Understood, sir.
From our inquiries, there is nothing in solar.
Sure, sir. Just really wanted an understanding about the capacity utilization...
Sorry to interrupt, sir. You may follow the question queue for follow-up questions. The next question is from the line of Khadija Mantri from Cap Global.
Congratulations on great set of numbers. So my question is that we are present in STATCOM transformers and grid applications. Can you please comment on the market size and the number of players in this space and the opportunity going forward?
Khadija, I think this question has already been addressed by our Chairman and MD actually more than once in this conversation.
The next question is from the line of Abhijit from ICICI Securities.
Just one question from my end. What is the size of the order that we received for this STATCOM single phase? Could you please quantify that?
That is close to about INR 198 crores, if I'm not wrong, just give me a moment. I think it should be around INR 200 crores, somewhere around INR 200 crores.
Right, sir. So about INR 1 crore per MVA?
Yes, yes.
Right. And sir, what would be the proportion of traction transformer business in our order book at the end of Q1?
Q1, there is nothing that we have manufactured for traction transformers.
Yes. I mean, sir, part of the order book, like the entire order book out of that?
Around 5% to 7%...
The next question is from the line of Riya from VS Securities.
Yes. Sir, the new capacity that you're adding in September '24 and December 2024, what would be the revenue contribution from each of these facilities?
Ria, first of all, this is September and December. Basically, it is the capacity expansion, which is basically coming by December as of now, right? And this is for 12,000 MVA addition for the entire year. And we are expecting close to INR 1,000 crores addition once it is fully functioned and fully operational.
Okay. And you will expect it to be fully operational and by what is the time line on that?
From the December onwards, it will be available for the production. And as just -- MD sir has mentioned that from September onwards, we will start taking the order booking for these energy transformers.
We will take this as a last question. I would like -- I would now like to hand the conference to Mr. Subhadip Mitra for closing comments. Over to you, sir.
Thank you. On behalf of Nuvama Institutional Equities, I would like to thank the management for giving us this opportunity to host the call. Any closing comments from your side, sir? Over to you.
Thank you to each and every one of you for being part of the earnings call and participating in the call. We appreciate your support and trust in us. We hope we have been able to address most of your queries. In case of any further queries that you may have, you may reach out to our Investor Relations advisers, and they will connect you -- with Chanchal. Have a great weekend. Thank you.
Thank you. On behalf of Transformers and Rectifier India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.