Shilchar Technologies is a company operating in the niche segment of manufacturing transformers, particularly inverter duty transformers (IDT) and distribution transformers, with a focus on serving the renewable energy sector, specifically solar and wind energy. The company has the capacity to produce transformers with voltage ratings of up to 132kV, but it mainly concentrates on transformers rated 66kV and below, which make up the majority of its output.
Approximately 50% of the company’s revenue comes from exports, with an average realization of around ₹10 lakh per MVA. To meet the increasing demand in the domestic and international renewable energy markets, Shilchar Technologies has expanded its production capacity by 3,500 MVA.
The company has set ambitious revenue targets of ₹550 crore for FY25, with plans to further scale up to ₹750-800 crore in FY26. It is also expected to maintain strong EBITDA margins of 25-28% over the next two years, showcasing operational efficiency.
Based on its growth prospects, including a 4X capacity expansion opportunity, improved EBITDA margin, and favorable demand in the renewable energy sector, we recommend a ‘Buy’ rating for Shilchar Technologies with a target price of ₹9,835. This target price reflects a P/E multiple of 34.5x, based on an estimated EPS of ₹285.08 for FY27E.
In conclusion, Shilchar Technologies seems well-positioned to capitalize on the growing demand for renewable energy solutions, and investors may consider this stock for potential long-term growth opportunities in the sector.
