Atlanta Electricals earnings beat strengthens high-voltage transformer growth and order-book visibility

Investment View and 1QFY27 Highlights

Motilal Oswal Financial Services retained its Buy rating and unchanged target price of Rs 1,950 for Atlanta Electricals in its July 22, 2026 1QFY27 results update. The stock was trading at Rs 1,614. The broker’s positive view is supported by an earnings beat, strong order inflows, improving participation in extra-high-voltage transformers and a favourable outlook for execution and margins.

Atlanta Electricals reported 1QFY27 revenue of Rs 4,718 million, up 48 per cent year on year and 14 per cent above Motilal Oswal’s estimate. Growth was driven by 26 per cent volume growth, a 22 per cent price increase, healthy execution of domestic orders, higher capacity utilisation and continued demand from transmission and distribution and renewable-energy customers.

Gross margin expanded 130 basis points year on year to 27.3 per cent, ahead of the broker’s 26.5 per cent estimate. EBITDA margin expanded 100 basis points year on year to 16.5 per cent, in line with estimate, although it declined sequentially because of a lag in passing higher raw-material prices to customers. PAT rose 50 per cent year on year to Rs 468 million, aided by better execution and lower-than-expected non-operating expenses.

Record Order Inflows and Execution Visibility

Order inflow was a quarterly record Rs 9,700 million in 1QFY27, taking the June 2026 order book to Rs 31,200 million, up 97 per cent year on year and 25 per cent sequentially. Around 30 per cent of Motilal Oswal’s FY27E order-inflow estimate of Rs 33,000 million was achieved in the first quarter.

Nearly Rs 24,000 million, or about 77 per cent of the order book, is expected to be executed in FY27, providing visibility for the next 12 to 18 months. More than 55 per cent of the order book comprises 220kV and above transformers, including almost Rs 3,000 million of 400kV transformer and reactor orders.

• Key wins included a Rs 2,900 million Rajasthan Rajya Vidyut Prasaran Nigam order and a Rs 2,800 million Punjab State Transmission Corporation order.
• The broker noted no moderation in ordering activity or pricing despite industry capacity additions.
• Demand appears to be absorbing incremental industry supply, supporting the outlook for order inflows and pricing.

High-Voltage Transformer Expansion

Management expects first 400kV transformer manufacturing to begin within two to three months, with mandatory short-circuit testing by early 3QFY27. Subject to successful testing, the existing Rs 3,000 million 400kV order could be executed in FY27. Meaningful 400kV order inflow and revenue are expected from FY28.

Management expects to finalise a 765kV technology tie-up in 2QFY27 to 3QFY27. Prototype manufacturing and Power Grid re-validation would begin thereafter, with commercial bidding for 765kV transformers, ICTs and reactors anticipated from 4QFY27.

The dedicated inverter-duty transformer facility remains on track for commissioning by December 2026. It is expected to add about 5,000MVA of annual capacity for renewable energy, battery energy storage systems and EV charging applications.

Margin Drivers and Medium-Term Outlook

Motilal Oswal identified several potential margin drivers, including a better revenue mix and pricing in the current order book, backward integration into tanks and radiators, higher exports and lower commodity costs from 3QFY27.

• Atlanta Electricals has incurred Rs 150 million to Rs 200 million of its planned Rs 1,800 million capex for tank and radiator manufacturing.
• The backward-integration initiative addresses around 4 to 5 per cent of transformer cost.
• Exports, focused on Europe, Africa and the US, are expected to reach about 10 to 15 per cent of sales over the medium term.
• Management reiterated its medium-term EBITDA-margin aspiration of 17 to 18 per cent.
• Management maintained guidance for 40 per cent revenue CAGR over FY25 to FY28, with stable to improving margins as utilisation rises.

Estimates and Valuation

Motilal Oswal maintained its estimates and forecasts revenue, EBITDA and PAT CAGRs of about 31 per cent, 34 per cent and 40 per cent, respectively, over FY26 to FY29E. The target price of Rs 1,950 is based on 32 times two-year forward earnings.

The stock traded at 43.6 times FY27E, 28.7 times FY28E and 22.4 times FY29E earnings.

Key Risks

• Slower tendering activity.
• Customer non-acceptance of higher-kV transformers.
• Supply-chain issues.
• A spike in commodity prices.