Shilchar Technologies Ltd: A Gem in the Transformer Manufacturing
Company Delivering c.50% YoY Consistent Revenue Growth Driven by Strong Product Demand.
Summary:
Shilchar Technologies is on a powerful growth trajectory!
The company reported stellar FY25 revenues of ₹623 crore — a solid 57% YoY jump. This isn’t a one-off: Shilchar has been consistently clocking impressive revenue growth of 50–60% YoY over the past five years.
To keep pace with surging demand, the company ramped up its manufacturing capacity last year from 4,000 MVA to 7,500 MVA — and plans are already in motion to add another 3,000 MVA over the next three years.
With transformer demand booming both in India and globally, Shilchar is poised to capture a bigger share of the domestic market, powered by increasing demand across sectors.
Before we dive in!
First Let’s Get a Overview of Topics Covered:
About the Company
Products Profile
Industry Outlook
Management Guidance & Growth Outlook
Global & Domestic Competition analysis
Capex
Industries Served
Revenue Mix
Business Risks
Forensic Analysis - includes
Receivable Growth vs Sales Growth
Sales Growth vs Inventory Growth
Fixed Asset Turnover Ratio
CFO/ EBITDA
Management Remuneration
Related Party Transactions
Management Overview
Ratio Analysis (with downloadable peer analysis excel)
Valuations
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Let’s Dive Into Shilchar Technologies Ltd.
1. About the Company
Shilchar Technologies Limited, incorporated in 1986, has established itself as one of India’s most prominent and respected manufacturers of Power & Distribution and Electronics & Telecom transformers.
The company serves both domestic and international markets, with a significant export footprint across North America, South America, and the Middle East, among other regions.
The Company’s journey reflects a strategic evolution in its product portfolio, transitioning from R-core transformers in the 1990s to Ferrite transformers in 1995, and ultimately focusing on Distribution & Power transformers from 2004-2007.
Shilchar’s product range extends to transformers up to 50 MVA, 132 KV Class, catering to a diverse array of industries including Private Utility Companies, Renewable Energy (Solar, Wind & Hydel), Sugar, Steel & Hydrocarbon Industries, Large Scale EPC Contractors, Corporate Clients, and Power Plant Developers.
Shilchar Technologies Limited is well-positioned to continue its trajectory as a prominent player in the transformer industry, both in India and globally.
2. Products Profile
Understanding Transformers and It's Measuring Unit
kV on a transformer stands for kilovolt, which is a unit of electrical potential difference or voltage. Kilo volts serve as a widely recognized measure for expressing high voltage levels. kV transformers play a vital role in the functioning of the power grid, facilitating the generation and distribution of electricity to residential, commercial, and industrial establishments.
Mega Volt-Amperes (MVA) It essentially reflects how much total power (without differentiating between usable and non-usable) a transformer can handle safely.
Their primary purpose is to convert electrical energy from one voltage level to another, enabling efficient transmission of power over long distances. Shilchar Technologies is focused towards manufacturing of transformers upto 50 MVA & 132 KV class.
MVA is used when discussing the size or capacity of the transformer and kV when referring to the voltage level it is designed to step up or down.
Transformer Segmentation
Shilchar Technologies is focused towards manufacturing of transformers up to 50 MVA & 132 KV class.
Power Transformers - Power transformers are used in the transmission network of higher voltages, available in various ratings of 400 kV, 200 kV, 110 kV, 66 kV, 33 kV in the market.
Distribution Transformers - Distribution Transformers are used in the distribution network of lower voltages, available in 11 kV, 6.6 kV, 3.3 kV, 440 V, 230 Volts.
Inverter Duty Transformers – Solar - An inverter duty transformer is a type of transformer specially designed to be used with inverters.
Generator Transformers - Wind - Generator transformers in wind turbine systems are crucial for converting the low-voltage electricity generated by the turbine into the higher voltage needed for transmission on the grid
Hydro Transformers - Hydro transformers, also known as generator step-up transformers, are a type of electrical transformer specifically designed for hydropower plants.
Furnace Transformers - The electric furnace transformer, also known as the smelting transformer, is a special power transformer mainly used for smelting metals such as steel.
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3. Industry Outlook
India Transformer Industry Outlook:
The Indian transformer industry has been experiencing robust growth in recent years, driven by a combination of strong domestic demand, supply shortages, improved realizations, and increasing export opportunities.
Government initiatives for grid-level investments & upgradation and the rapid expansion of renewable energy capacity, particularly in the solar sector, are significant drivers of transformer demand.
The India Transformer Market size is estimated at USD 104.13 million in 2025, and is expected to reach USD 156.80 million by 2030, at a CAGR of greater than 8.53% during the forecast period (2025-2030).
The transformer market is also benefiting from increased capital expenditure in traditional sectors such as steel and cement, as well as emerging sectors like data centres and corporate adoption of captive green energy solutions. This diversification of demand sources contributes to the industry’s robust outlook.
Global Transformer Industry Outlook:
The global power transformer market size is expected to reach a valuation of USD 38.91 billion by 2030 and is expected to expand at 7.1% CAGR from 2023 to 2030. Technical developments and growing electricity consumption is expected to accelerate power transformer industry growth.
The global supply constraints, particularly in the United States and Europe, are creating significant export opportunities for Indian transformer manufacturers. This international demand, coupled with favourable government policies aimed at addressing increasing energy needs, is expected to drive sustained growth in the Indian transformer market.
4. Shilchar Technologies Growth Outlook and Management Guidance
The company has posted revenue of 623 crores in FY25, which is astonishing 57% increase YoY. 6 years median historical revenue growth for the company is approximately 56% YoY. On top of the revenue growth, EBITDA margin has also gone up from 8% in FY21 to 30% in FY25, such increase in EBITDA margin is largely on account of rising export percentage to the total revenue.
The management has given guidance for 20%-25% revenue growth for FY26 which is c.750 crores of revenue for the financial year. However, the management has also highlighted that this guidance is on the conservative side and given the company track record they always beat the projections which was given at the beginning of the year.
In the coming years, revenue share from domestic market is expected to increase driven by huge demand in the various sectors of India. Though, export demand is also rising particularly from USA from various conventional and renewables sectors.
5. Global & Domestic Competition analysis
Indian players in transformer manufacturing:
The India Power Transformer Market has a diverse and competitive landscape characterized by a mix of established players and emerging companies vying for market share. Companies in this market compete not only on the basis of technology and innovation but also in terms of pricing, product quality, and customer service.
There are multiple players in the India transformer manufacturing market including EVR Electricals, Gujarat Transformers Private Limited, Transformers & Rectifiers (India) Ltd, Danish Transformers, etc.
Global transformer manufacturers:
The top 3 Exporters of Power Transformer are China, Germany and India. Whereas, The top 3 Importers of Power Transformer are Vietnam, Mexico and Germany.
The Asia Pacific region has emerged as the fastest growing regional market for power transformers. Undergoing rapid electrification, countries like China, India, and Vietnam, are investing heavily in transmission and distribution networks to meet the rising electricity demand from industrial, commercial and residential sectors.
Globally there are many players into this market segment including companies like General Electric, Siemens, Daelim Transformer, Mitsubishi Electric, Toshiba. According to Maximize Market Research (MMR), the top 5 power transformer market contributors are ABB, General Electric, Siemens AG, Mitsubishi Electric, and Schneider Electric. They will account for more than 38% of the worldwide market share in 2023.
6. Capex
Shilachar Technologies has increase it's manufacturing capacity from 4000 Mega Volt-Amperes (MVA) to 7500 MVA last year. New capacity is now operational from August 2024. There is sufficient availability of land to increase the manufacturing capacity 3X from current capacity of 7500 MVA. The management has also mentioned in the recent concall that there is a possibility of another 3000-4000 MVA capacity addition in the next 3-4 years.
7. Industries Served
8. Revenue Mix
FY25 Updated Chart
9. Business Risks
The Company is exposed to fluctuations in the prices of its raw materials. In case of principal raw materials such as copper, aluminum, oil etc, the risks on costing of the Company’s products on account of fluctuations in prices of these materials is quite high. The Company tries to limit the effects of fluctuations in prices of these critical materials by following risk management policies including use of derivatives. For this, the Company enters into derivative buy or sell contracts for these commodities on the MCX Exchange. These contracts are generally not used for trading or speculation purposes.
10. Forensic Analysis (Basics)
If possible please read this segment in web, as images and calculations will be more visually clear.
a) Receivable Growth vs Sales Growth
Sales has been growing 56% YoY considering last 5 years median, at the same time Receivables last 5 years median growth is just 33%, which does not raise any red flags.
However, in the last financial year receivable grew upto 229 crores from 94 crores in FY24, which is a rise of 144%, where sales was up only 57% YoY. Highlighting the significant rise in receivables the management clarifies that they have Line of Credit (LC) with 180 days of payout with all the customers, and if the company need they can encash the LC anytime but since they have surplus funds and they do not need funds they wait for 180 days, later they get the funds with interest.
That's the reason the receivable numbers look bigger.
b) Sales Growth vs Inventory Growth
Sales Growth and Inventory Growth seems to be in line, where 3 years median sales growth is c.56% YoY and 3 years median inventory growth is 55% YoY.
c) Fixed Asset Turnover Ratio
Fixed asset turnover ratio has increased from 1.82x in FY20 to 10.56x in FY25. Showcasing a robust operating efficiency and capacity utilization.
d) CFO/ EBITDA
Shilchar has historically maintained a strong CFO/EBITDA ratio in the 60–70% range (barring FY22), reflecting healthy cash conversion. However, in FY25, the ratio dipped to 22% — a temporary deviation explained in our earlier receivables analysis. Interestingly, the company chose not to encash its Letter of Credit (LC) from a key customer, instead opting to earn additional interest income — a strategic move that slightly deferred cash inflows but added to the bottom line.
e) Management Remuneration
Growth in management remuneration and median employee remunerations seems to be justified considering the surge in EBITDA numbers from last 4-5 years.
Considering 4 years median growth in remunerations, Management salaries growth is c.14%, 5% and 50% and median employee salaries growth is 11%. Where EBITDA grew at 146% YoY in the last 4 years.
Mr. Aashay Alay Shah, Whole-Time Director has taken a jump from 24 lakhs to c.48 lakhs in FY23.
f) Related Party Transactions
There were no materially significant related party transactions with the Company’s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company
11. Management Overview
Board Meetings Held & Attended
12. Ratios
Ratio is never done in isolation, it is like a blood test of the company. We must do this with peer comparisons.
Kindly download the given excel to view in detail.
Download excel from <Here.>
13. Valuations
Shilchar Technologies is currently trading at Rs. 4,959 and PE 33.8X where industry PE is 46.3x, Company’s median PE for the last 5 years is c.19x-20x which is much lower than the current PE.
If we look into PEG ratio of the company is approx. 0.56 which justifies the current valuation given the company keeps posting such extraordinary EPS numbers in the upcoming quarters.
In the year 2021 EV/EBITDA was c.7.7x which has shoot upto 21.48x in the year, 3x increase in valuation. All the other metrics such as price/sales, price/cfo, price/book value have also shoot up significantly.
Apart from the stretched valuation, growth of the company is significant which some sort of justifies the higher valuation.
Note:
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Disclaimer:
The above shared information has been gathered through various public sources. This is not a Buy or Sell recommendation, use this article only for information purpose.
Sources:
https://indextb.com/files/2024/2/50cf8711-a1a8-413a-8bcf-6e14dd5e30aa_Manufacturing%20of%20Transformer.pdf,
https://www.mordorintelligence.com/industry-reports/india-transformer-market,
https://www.marketresearchfuture.com/reports/india-power-transformer-market-48591,
https://www.maximizemarketresearch.com/market-report/power-transformer-market/20781/.
The credit line explanation appears a little flawed as the same would have been true for last q4 also, so not convinced. It can be sale recognition without sales.
Capacity expansion takes minimum one year and not announced yet, so room for growth this year is limited as already running at full capacity. Stay cautious.
loved it!