Small Cap Stock Soars 5% After Winning Orders From Adani Group, L&T

Transformers and Rectifiers India stock shot up 5% and hit upper circuit on Friday after the company won three orders worth ₹359 crore. 

What Happened: Transformers and Rectifiers received an ₹179 crore order from Adani Group, ₹161 crore order from AL Anwar International and a ₹19 crore order from Larsen and Toubro. 

For Adani Group, the company will engineer and manufacture 6 500 MVA 400 kV Transformers, 3 125 MVAR 400 kV Reactors, and 16 unit transformers with necessary accessories. The timeline for project completion is 18 months. For AL Anwar International the company will make 90 MVA, 132/33 KV Transformers with Fittings and Accessories. This project will be completed by February 2025. For L&T, the company will manufacture and engineer a 250MVA Transformer with necessary accessories. 

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Brokerage Views: Last week, Antique initiated coverage on the stock with a "buy" call and set a target price of ₹847, as they see the company's revenue and earnings grow by 3.6 times and 10 times respectively by FY27 given the demand tailwind for transformers. 

According to the Draft National Electricity Plan report on transmission, India has planned a transmission capex of around ₹48 lakh crore over FY23-27. Out of this, ₹31 lakh crore will be utilised for inter-state transmission and the balance ₹17 lakh will be used for intra-state transmission system. The company has announced a ₹500 crore investment plan. The company is expanding its capacity at the Changodar plant by 12,000 megavolt-amperes, which is expected to be completed by 4QFY25. 

Price Action: Shares of Transformers and Rectifiers surged 5% and got locked in upper circuit at ₹618.65 on Friday's trading session. 

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