Vilas Transcore FY26: Volume-led growth, margin reset, and a wider transformer component play

Vilas Transcore Limited closed FY26 with a clear split between what moved and what priced. Volumes rose by about 65 percent year-on-year, while revenue grew 30 percent to Rs 4,607 million. EBITDA increased 15 percent to Rs 515 million and profit after tax also rose 15 percent to Rs 396 million. But the year was not a straight-line improvement. Gross margin fell to 17.82 percent from 21.31 percent, and EBITDA margin declined to 11.17 percent from 12.68 percent. PAT margin eased to 8.6 percent from 9.8 percent.

Management’s explanation is consistent with the numbers. CRGO steel prices dropped to around Rs 180 to Rs 185 per kg during the period, pulling down realizations even as dispatch volumes accelerated. At the same time, Unit 3 ramp-up brought initial operating and establishment costs before utilization catches up. The company says inventory discipline and operating controls helped reduce the damage, but FY26 still reflects the early phase of expansion.

The backdrop matters. Vilas Transcore sits inside the transformer supply chain, where demand is being driven by India’s power sector expansion, renewable integration, and grid capex. The company’s FY26 story is about scaling core CRGO processing while widening the addressable wallet through radiators, nanocrystalline cores, and the upcoming copper conductors line.

FY26 in numbers: growth with a margin headwind

Revenue from operations rose to Rs 4,607 million in FY26 from Rs 3,531 million in FY25. Gross profit increased to Rs 821 million from Rs 752 million, but the gross margin compressed by 349 basis points. EBITDA improved to Rs 515 million from Rs 448 million, yet EBITDA margin fell by 151 basis points. Profit after tax grew to Rs 396 million from Rs 345 million, while EPS moved up to Rs 16.16 from Rs 14.72.

Operationally, the scale jump is visible in production. Total production volume increased to 19,856 MT in FY26 from 12,069 MT in FY25 and 10,927 MT in FY24. This is the clearest marker of Unit 3’s impact after the capacity expansion from 12,000 MTPA to 36,000 MTPA.

The income statement shows the same trade-off. Cost of materials consumed increased sharply to Rs 3,898 million from Rs 2,745 million, reflecting higher throughput and raw material intensity. Employee costs rose to Rs 159 million from Rs 117 million, consistent with expansion. Other expenses actually fell to Rs 147 million from Rs 187 million, which suggests some cost controls even while margins were pressured by pricing and fixed costs.

Below is a consolidated snapshot of the core metrics.

A balance sheet reading adds context to the ramp-up. Property, plant and equipment plus intangibles rose to Rs 814 million in Mar-26 from Rs 323 million in Mar-25. Capital work-in-progress declined to Rs 233 million from Rs 377 million, suggesting part of the build-out moved from under-construction to operating assets.

Working capital expanded alongside growth. Inventories rose to Rs 723 million in Mar-26 from Rs 691 million in Mar-25. Trade receivables increased to Rs 775 million from Rs 602 million. Other current assets increased to Rs 314 million from Rs 214 million. Short-term borrowings climbed to Rs 390 million from Rs 114 million, and management links this to higher working capital requirements for business growth and the ramp-up of new facilities. Cash and cash equivalents ended at Rs 944 million versus Rs 1,123 million a year ago.

Cash flow also reflects the transition year. Operating cash flow was negative in FY26 at minus Rs 17 million, after minus Rs 415 million in FY25 and plus Rs 492 million in FY24. Investing cash flow was minus Rs 423 million in FY26. Financing cash flow was plus Rs 261 million.

Capacity is the core lever, and FY26 proves it

The company’s investment case is anchored in capacity and throughput. Unit 1 and Unit 2 in Vadodara carry 12,000 MTPA of CRGO lamination capacity across 1,42,000+ sq ft. Unit 3 adds scale and adjacency products, with 24,000 MTPA of CRGO lamination capacity and new lines for nanocrystalline cores, radiators, and copper conductors within a 4,00,000+ sq ft facility.

Vilas Transcore states that installed CRGO lamination capacity has tripled from 12,000 to 36,000 MTPA, with Unit 3 commissioned in July 2025. This removed a capacity constraint and sets the base for 45 to 50 percent volume growth. The production table supports the point. For multiple years, installed capacity stayed at 12,000 MTPA, while production climbed toward full utilization, reaching 12,069 MT in FY25. With the capacity step-up in FY26, output jumped to 19,856 MT.

New products are intended to raise wallet share per customer rather than depend purely on CRGO processing. The company positions itself as moving from a component supplier to a broader transformer value chain partner. This matters because it can reduce reliance on one commodity-like pricing cycle, although it also adds execution complexity.

Nanocrystalline cores are an example. The facility was commissioned during FY26 and contributed Rs 3.48 crore of revenue in H2 FY26, with sales volume of about 30,250 kg. The company expects utilization of around 15 MT per month, or about 180 MTPA, in FY27. This implies FY27 is still a ramp year rather than a full-run-rate contribution.

Radiators are another adjacency. The radiator manufacturing plant has recently commenced operations and is expected to start contributing to revenues going forward. Management frames this as forward integration and a way to participate in the cooling subsystem that transformer OEMs must source.

The third leg is copper conductors. Specialized and customized machinery has arrived, installation and erection are underway, and trial production is expected by end of September 2026. Revenue contribution is expected from H2FY27 onwards. The project details are clear: capex of Rs 25 to Rs 30 crore, funded through a term loan and internal accruals, located in Unit 3 premises. Phase I capacity is 1,550 to 1,800 MTPA, with Phase I products including copper paper insulated copper conductors, CTC conductors, and paper insulated aluminium conductors.

Strategy is widening, but approvals and execution will decide outcomes

In the chairman’s message, the main forward-looking claim is that as utilization improves, the impact of fixed costs from the new unit should reduce. That is a reasonable operating leverage argument for a manufacturing expansion. But the FY26 margin decline shows that the ramp can be noisy, especially when raw material prices move sharply in the same year.

CRGO price decline was a key swing factor. Management explicitly points to CRGO prices falling to around Rs 180 to Rs 185 per kg, which explains why volume growth outpaced revenue growth. In a business where throughput is a major driver, a realization drop can also compress gross margins even if operating discipline is strong.

The next strategic gate is Power Grid Corporation of India approval, described as currently in process. The presentation states that this could enable access to larger government and institutional orders, open supply of higher KV transformer components, and improve eligibility to partner with global MNCs. While the document does not quantify the revenue potential, the direction is clear: a move from being a supplier to private transformer OEMs toward being qualified for the most demanding procurement programs.

The company also highlighted entry into high voltage bushings through a new entity incorporated with promoters, where Vilas Transcore will initially hold a 25 percent equity stake. The range is stated as 12 kV to 400 kV. The first phase is R and D and product development, followed by phased commercialization over the next year. This is a different business in terms of technology and qualification cycles, and the minority stake suggests a measured approach.

From a positioning standpoint, the company frames India’s power sector as a structural growth opportunity. The presentation cites about 520 GW installed capacity in FY26 and about 1,846 BU generation, with more than 50 percent capacity from non-fossil sources and a 500 GW non-fossil target by 2030. It also highlights emerging demand sources such as EV adoption, data centers and AI, railway and metro electrification, and industrial expansion.

For transformers specifically, the presentation points to T and D capex of more than Rs 9 lakh crore till 2032, a transmission capacity target rising from about 1,451 GVA in FY26 to about 2,412 GVA by FY32, and a supply-demand gap with long lead times globally. It also references an HVDC pipeline of about 32 GW and a capacity expansion cycle where industry capacity rises from about 375 GVA in FY25 to about 650 GVA by FY27E. This is the demand framework in which Vilas Transcore is expanding.

What to watch in FY27: growth guidance, new lines, and margin normalization

Management provided FY27 guidance that ties directly to the expanded asset base. The company expects CRGO volume growth of 45 to 50 percent and turnover growth of 40 to 50 percent, depending on product mix, while maintaining EBITDA and PAT margins. This is an important statement because it suggests FY26 margin pressure is not viewed as a new normal.

Execution milestones will shape whether the guidance holds.

First, utilization at Unit 3 needs to rise without creating working capital strain. Receivables and inventories already moved up in Mar-26, and operating cash flow was slightly negative in FY26. The company ended the year with Rs 944 million in cash and cash equivalents, which provides a buffer, but sustained growth typically demands tight cash conversion.

Second, nanocrystalline cores need to move from small H2FY26 revenue contribution toward the targeted run-rate in FY27. The company’s expected 180 MTPA utilization level provides a concrete marker.

Third, radiators need to translate commissioning into billing. The plant has commenced, but FY27 will be the first year where the revenue line should begin to show the benefit.

Fourth, copper conductors are timed for trial production by end of September 2026, with H2FY27 revenue contribution expected. That timing means FY27 results will likely be split between early ramp costs and initial revenues, similar to how new units tend to behave.

Finally, the Power Grid approval process and the high voltage bushing venture are medium-term levers. They are not the drivers of next quarter’s numbers, but they can influence the customer profile and margins over time.

Vilas Transcore ends FY26 with scale added, products added, and a demand environment that remains supportive. The key question for investors is whether FY26 was the low point for margins in this capex cycle. If utilization rises and new lines contribute without further pricing shocks, the company’s stated aim of maintaining EBITDA and PAT margins alongside 40 to 50 percent turnover growth becomes the central FY27 test.