Buy Atlanta Electricals Ltd For Target Rs.1,950 Motilal Oswal Financial services Ltd
A strong start to the year
Atlanta Electricals (ATLANTAE)’s 1QFY27 revenue and profit were ahead of our estimates. Margin expanded 100bp YoY, while it dipped sequentially due to a time lag in the pass-through of higher RM prices. Revenue grew 48% YoY, driven by a healthy volume growth of 26% YoY and a price hike of 22% YoY. Order inflows also remained strong at INR9.7b, taking the total order book to INR31.2b. Going forward, we would monitor 1) short circuit test clearance for 400kV transformers, 2) technology tie-up for 765kV transformers, and 3) margin trajectory. We maintain our estimates and reiterate our BUY rating on the stock with an unchanged TP of INR1,950 (based on 32x two-year forward earnings).
Beat across all parameters
ATLANTAE’s results were above our estimates across all metrics. Revenue increased 48% YoY to INR4.7b, beating our estimates by 14%. The growth was driven by healthy execution across domestic orders, higher capacity utilization, and continued demand from the transmission & distribution and renewable energy sectors. Gross margin expanded 130bp YoY to 27.3% vs. our estimate of 26.5%. Absolute EBITDA increased 58% YoY to INR771m, 14% above our estimate. However, the EBITDA margin expanded 100bp YoY to 16.5%, in line with our estimate. ATLANTAE’s PAT increased 50% YoY to INR468m, 34% ahead of our estimate, mainly due to better-than-expected execution and lower-thanexpected non-operating expenses. Order inflow during the quarter stood at INR9.7b, taking the order book as of Jun’26 to INR31.2b (+97% YoY/+25% QoQ). Over 55% of the order book comprises 220 kV transformers, while 400 kV transformers and reactors contribute nearly INR3b
Order momentum remains healthy
Order inflow during 1Q stood at INR9.7b, taking the order book as of Jun’26 to INR31.2b (+97% YoY/+25% QoQ), implying healthy revenue visibility over the next 12-18 months. 1Q inflows are tracking well, with ~30% of our FY27E inflows (INR33b) already achieved. Key order wins include an INR2.9b order from Rajasthan Rajya Vidyut Prasaran Nigam Ltd. for the supply of 160MVA, 80MVA, and 31.5MVA power transformers and an INR2.8b order from Punjab State Transmission Corporation for 23 units of 160MVA, 45/66kV transformers. The order mix continues to improve, with 220kV and above transformers accounting for over 55% of the order book, including nearly INR3b of 400kV transformer orders, reflecting the company's increasing participation in the EHV segment. Of the total order book of INR31.2b, nearly INR24b (~77%) is expected to be executed during FY27. Further, despite multiple industry players commissioning new capacities over the next 3-4 months, the company did not experience any moderation in ordering activity or pricing. This suggested that industry demand continues to comfortably absorb incremental capacity. We expect order inflows to clock a CAGR of 21% over FY26-29.
Status of 400kV and 765kV transformers
On the 400kV platform, manufacturing of the first transformer is likely to commence over the next 2-3 months, with the mandatory short-circuit test scheduled by early 3QFY27. Subject to successful testing, management expects to execute the existing INR3b 400kV order within FY27 itself, while meaningful order inflow and revenue contribution from the 400 kV class are anticipated from FY28 onwards. On the 765kV platform, management expects to finalize its technology tie-up during 2Q3QFY27, following which prototype manufacturing and Power Grid re-validation will commence. Commercial bidding for 765kV transformers, ICTs, and reactors is expected to open by 4QFY27. While industry peers are adding significant 400kV capacity, meaningful commercialization remains constrained by qualification processes, customer approvals, and testing requirements. Further, the dedicated inverter-duty transformer (IDT) facility remains on track for commissioning by the end of CY26. This will add nearly 5,000MVA of annual manufacturing capacity to cater to renewable energy, BESS, and EV charging applications.
Valuation and view
The stock currently trades at 43.6x/28.7x/22.4x P/E on FY27/28/29E EPS. We reiterate our BUY rating with an unchanged TP of INR1,950 based on 32x two-year forward earnings.
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