Supreme Power Equipment Ltd Q3 FY26 Earnings Analysis

- FY 2026: Targeting around INR 200 crores, with existing capacity near full utilization and new plant starting commercial production in January 2026. - Q4 FY26: New capacity expected to contribute 10-20% utilization (approx. INR 25-30 crores revenue). - FY 2027: Anticipated 30-40% growth, aiming for INR 280 crores in revenue. - FY 2028-29: Full capacity utilization of new facility expected, with revenue reaching INR 500-600 crores annually. - Long-term outlook: Demand for transformers is strong for the next 10 years globally. Capacity expansion decisions for further scaling expected post 2027-28 business evaluation. - Focus on higher capacity power transformers (50 MVA to 160-315 MVA) to drive volume and revenue growth. - Order pipeline between INR 600-700 crores with expected 10-15% vending rate supports sustained growth.

- The company expects a 30% to 40% growth in topline for FY27, targeting INR 200 to INR 280 crores revenue. - Margin expansion is expected to be limited, with operating margins expected to sustain around 10% to 12%. - Capacity expansion from 2,500 MVA to 9,000 MVA planned, enabling manufacturing of transformers up to 160 MVA. - The new manufacturing facility planned to be fully operational by December 2025, with production from January 2026. - EBITDA margins are expected to sustain or modestly improve, with careful order selection to maintain margin discipline. - Net profit growth in H1 FY26 was 31.98%, showing strong profitability momentum. - EPS for H1 FY26 stood at INR 3.76, supported by improved operational execution and healthy order inflow. - Long-term demand outlook remains robust for at least 10 years, supporting sustained growth potential.

- Capacity expansion ongoing: New facility commercial production expected from January 2026, targeting 500-600 crores revenue in 2-3 years (FY '28-29). - Total capex includes INR 100 crores for factory premise establishment. - Expansion funded through loans (INR30-40 crores sanctioned, INR30 crores utilized), IPO proceeds, and internal accruals. - Plans for backward integration (making transformer tanks) are under consideration but in early stages. - Potential future capex decision expected around 2027-28 based on demand and utilization. - Land procurement for expansion planned near existing setup; availability confirmed but pricing uncertain. - Strategic focus on larger power transformers (up to 315 MVA) and geographic expansion beyond South India (e.g., Karnataka, Telangana). - Export opportunities under evaluation with ongoing discussions but no finalized deals yet.

- For the recent capacity expansion, Supreme Power Equipment Limited has raised funds through a combination of debt, IPO proceeds, and internal accruals. - Specifically, a loan of INR35-40 crores has been sanctioned, with INR30 crores already utilized and INR10 crores yet to be utilized. - There is no explicit mention of any new or future fundraising planned through debt or equity beyond this. - The company is currently focused on utilizing the sanctioned loan amount for capacity expansion. - Any further capacity expansion decisions, potentially requiring additional funding, are expected to be made based on business performance in FY 2027 and 2028, but no concrete fundraising plans are disclosed yet.

- Current order book value is around INR 235 crores (H1 FY26). - Government orders constitute approximately INR 112 crores, including a INR 60 crores NLC order. - Non-government orders account for about INR 123 crores. - Order book breakup by product: Distribution transformers INR 53 crores, Power transformers INR 105 crores, Inverter duty transformers INR 76 crores. - Execution timeline: 50-60% of the current order book expected to be executed in the current financial year; balance will carry over to next year. - Bidding pipeline is high, with more than INR 600 crores worth of tenders and offers under consideration. - Historical winning rate for bids is between 10% to 15%. - New orders expected to increase after vendor approvals for new plant capacity.