Vilas Transcore in FY26: Bigger capacity, softer margins, and a push beyond CRGO

Vilas Transcore Limited closed FY26 with visible scale-up, but also with the typical growing pains of a new plant ramp. Revenue from operations rose to Rs 4,607 million, up 30% year-on-year, while production volume increased sharply to 19,856 MT. Management highlighted that volume growth was significantly higher than revenue growth because CRGO prices fell to around Rs 180 to Rs 185 per kg during the period.

Profitability moved lower, but remained resilient considering the sharp raw material price correction and the fixed-cost absorption challenges of Unit 3. Gross margin declined to 17.8% from 21.3% in FY25, and EBITDA margin fell to 11.2% from 12.7%. PAT grew 15% year-on-year to Rs 396 million, though PAT margin moderated to 8.6%.

FY26 scorecard: volume-led growth with margin pressure

The year’s headline was the ramp-up of Unit 3. The company’s CRGO lamination capacity expanded from 12,000 MTPA to 36,000 MTPA, with the new unit commissioned in July 2025. This removed capacity constraints that the business had been operating under, and FY26 production reflects the first full benefit of incremental throughput.

However, the earnings profile did not expand at the same pace. Management attributed the margin compression to two factors: initial operating and establishment costs at the new unit while utilization is still scaling up, and a sharp decline in CRGO steel prices, which reduced realizations.

The balance sheet reflects the expansion cycle. Property, plant and equipment rose to Rs 814 million at March 2026 from Rs 323 million at March 2025, while short-term borrowings increased to Rs 390 million. The company also disclosed that operating cash flow was slightly negative in FY26 at -17 Rs Mn (after a larger negative in FY25), indicating that working capital build and ramp-up costs are still flowing through.

Moving from CRGO to a broader transformer component platform

While CRGO processing and transformer core solutions remain the backbone, the strategic narrative is now about broadening the wallet share per customer. The investor deck positions Vilas Transcore as evolving from a component supplier to a more integrated transformer value chain partner.

Three additions stand out.

First is nanocrystalline cores. The facility was commissioned in FY26 and contributed Rs 3.48 crore revenue during H2 FY26, with sales volume of about 30,250 kg. The company expects FY27 utilization of around 15 MT per month, equivalent to roughly 180 MTPA, versus installed capacity of 240 MTPA. On the concall, management discussed a conservative FY27 turnover expectation of around Rs 18 to 20 crore at this utilization level.

Second is radiators. The company stated that radiator commercial production started in April 2026, implying FY27 will be the first year of revenue contribution. Management guided that radiator utilization is expected to be around 20% to 25% in the year, with revenue expectation of about Rs 25 crore, while indicating margins in the 18% to 20% range in Q&A.

Third is copper conductors. In the deck, Phase 1 capex is stated at Rs 25 to 30 crore, funded through a term loan and internal accruals, with Phase 1 capacity of 1,550 to 1,800 MTPA and expected completion by September 2026. Management reiterated in the concall that trial production is expected by end-September 2026, with revenue contribution likely from H2 FY27 onwards. The concall also included an indicative scenario where ~1,000 MT output in the year could translate to ~Rs 100 crore revenue.

Guidance and the key variables investors should track

For FY27, management guided CRGO volume growth of 45% to 50% and turnover growth of 40% to 50%, with EBITDA and PAT margins expected to be maintained. In the concall, management also described a target of about 30,000 MT volume for the year and suggested that H1 could be weaker than H2 due to temporary demand disruptions.

Two operating variables repeatedly came up.

One is CRGO price volatility. Management stated that CRGO cannot be hedged in a conventional way, and inventory management and procurement strategy are the main levers. The concall also discussed increased competition from Chinese mills importing into India, with a reference to BIS approvals being an important gating factor for supply.

The second is working capital. Receivables are described as typically on a 60-day cycle, and management acknowledged an end-to-end working capital cycle in the 95 to 100 day range. This matters because the company is simultaneously ramping volumes and adding new product verticals, which tends to increase inventory and receivables before steady-state cash conversion sets in.

Bottom line

FY26 was a transition year for Vilas Transcore. It demonstrated scale through a sharp jump in volumes after Unit 3 commissioning, but the benefits of operating leverage were partially offset by CRGO price correction and ramp-up costs. The next phase hinges on three items management has clearly flagged: better utilization of expanded CRGO capacity, commercialization and ramp of radiators and nanocrystalline cores, and the successful commissioning of the copper conductors line by September 2026 with meaningful contribution in H2 FY27.

If these play out as guided, FY27 becomes less about proving capacity and more about proving execution, mix, and cash conversion.