This power related stock has rallied 63% in 4 weeks; zoomed 660% in 1 year

Shares of Indo Tech Transformers hit a new high of Rs 1,432.65 on Tuesday, as they locked in 10 per cent upper circuit in otherwise a weak market on a healthy business outlook. The stock trade saw only buyers on the counter on the BSE at 01:53 PM. In comparison, the S&P BSE Sensex was down 0.76 per cent at 72,841.

In the past four weeks, the stock price of heavy electric equipment company has surged 63 per cent. While in the past one year, it zoomed 660 per cent, compared with a 22 per cent rally in the benchmark index.

Indo Tech Transformers is engaged in the business of manufacturing power and distribution transformers and various special application transformers, mobile sub-station transformers and sub-stations. The company has its manufacturing plant located at Kancheepuram in Tamil Nadu.

For the first nine months (April to December) of the financial year 2023-24 (9MFY24), the company had reported a solid profit after tax (PAT) of Rs 21.29 crore on operational performance. It posted a PAT of Rs 6.40 crore in 9MFY23. Revenue from operations jumped 45 per cent to Rs 328.50 crore from Rs 226.24 crore in the same period of previous fiscal.

The current order book and new order inflows are expected to translate into healthy revenue growth and improvement in profitability in FY2024, analysts said.

Meanwhile, growing population along with increasing electrification and per capita usage will further provide impetus to the rising demand for electricity. Many power sector reforms are being introduced by the Government to bring efficiency, promote decarbonisation and ensure (24X7) reliable and affordable power supply.

Affordable and reliable power in a sustainable manner is the guiding principle for India’s power sector, the company said. It further added that Government’s focus on transition from fossil fuel, and strengthening the distribution sector by improving operational and financial efficiency of DISCOMs provides for a positive future outlook for the industry and that of Indo Tech Transformers, the company said.

Indo Tech Transformers is a subsidiary of Shirdi Sai Electricals Limited (SSEL), and SSEL currently holds a 75 per cent stake in the company. SSEL bought a majority stake from Indo Tech Transformers’s erstwhile promoters - Prolec GE (a joint venture between Mexican industrial group Xignux S.A. de C.V., and General Electric company). The remaining 25 per cent stakes are held by retail investors (20.05 per cent), bodies corporate (2.86 per cent) and others.