Atlanta Electricals Q2 FY27 Earnings Call: Reaffirms 40% CAGR Through FY28, Order Book At Rs. 3,197 Cr (ATLANTAELE)

Weather-Disrupted Quarter; PAT Still Grows 28% YoY

• Q2 FY27 revenue at Rs.309.1 Cr, +23.1% YoY — achieved despite heavy rainfall in Gujarat forcing precautionary plant shutdowns twice and disrupting transportation and delivery schedules.
• Q2 EBITDA at Rs.59.6 Cr (+8.8% YoY) — margin of 15.3% vs 7.3% in Q2 FY26, a ~201 bps contraction on higher raw material costs under firm-price contracts and temporary execution disruptions.
• Q2 PAT at Rs.32.1 Cr, +28% YoY — PAT margin 8.2% vs 7.9%, aided by finance costs falling to Rs.8.5 Cr from Rs.13.2 Cr; EPS Rs.4.18 vs Rs.3.50.
• Gross margin moderated to 26.6% from 30.9% — elevated transformer oil, copper and steel prices; firm-price orders booked in the prior year (~15% of Q2 revenue) lacked cost pass-through flexibility.
• H1 FY27 revenue at Rs.856.4 Cr, +35.5% YoY — EBITDA Rs.136.7 Cr (16.0% margin vs 16.4%), PAT Rs.79 Cr (+40.4%); D&A rose to Rs.20.1 Cr from Rs.7.9 Cr on new capacity commissioning.
• Inventory at Rs.632.9 Cr as of 30 Sep 2026 (vs Rs.364.1 Cr in Mar 2026) — partly finished transformers awaiting dispatch/customer acceptance; progressive release expected as deferred orders execute.

Rs.3,197 Cr Order Book; Deliberate Slowdown in Low-Voltage Intake

• Order book of Rs.3,196.97 Cr as of 30 Sep 2026, +54.5% YoY — vs Rs.3,116.63 Cr in Q1 FY27 and ~Rs.2,069 Cr a year ago; inquiry pipeline ~Rs.19,464 Cr; new orders of ~Rs.421 Cr in Q2.
• Q2 order inflow of Rs.421 Cr, down ~55% QoQ, was a deliberate decision — CMD Neeral Patel said it is "not anything related to the markets"; heavy Q1 FY27 booking underpins growth for at least the next 1.5 years.
• Key win: Rs.193.92 Cr LOI from AP Transco — 12 units of 160 MVA, 220 kV class auto transformers; 12 new customers added in Q2, including the first US export customer, new state utilities and new renewable energy players.
• Order mix: 400 kV class is 8.60% of the order book, 220 kV class 47% — the Rs.184 Cr 400 kV order has entered execution (CFO Mehul Mehta); 400 kV orders open after prototype development in Q3 FY27.
• Commodity volatility delayed order finalization — including tenders where the company is L1 but POs are awaited; management expects finalization to improve during H2 FY 2026-2027.
• Firm-price exposure is small and winding down — ~3-4% of the order book per management's corrected figure; since the Middle East war began in March, all inquiries quoted on price-variation terms; the "very minuscule" remainder executes in Q3 FY27 with none left for Q4 FY27.

~Rs.180 Cr of Deliveries Deferred, Not Cancelled

• Finished orders worth ~Rs.180 Cr could not be delivered in Q2 FY27 — deferred, not cancelled; ~70% already dispatched in October 2026, balance expected in Q3 FY27 subject to customer site readiness.
• Monsoon hit dispatches, not production — production utilization was higher than revenue-linked MVA utilization; H1 FY27 production totalled 8,664 MVA (CFO).
• Q2 plant utilization uneven — Unit 1 (Anand) 60%, Unit 2 (Anand) 40%, Bangalore 90%, Vadodara 30%, Jambusar (765 kV plant) 7-8%; management targets optimal utilization of 80% and expects utilization to move up in H2 FY27.
• Facilities operating normally post-monsoon — customer site activities resumed, with focus on execution and timely deliveries during H2 FY 2026-2027.
• Temporary supply-chain disturbance in Q2 — back-to-back typhoons in China/Japan and the Middle East war hampered container availability; forward planning was and remains on track; no procurement difficulty for copper conductor, bushings or other components.

400 kV Prototype, 765 kV In-House, IDT and Backward Integration

• First 315 MVA, 400 kV transformer manufacturing commenced Oct 2026 — completion and short-circuit testing targeted in Q3 FY27, commercial contribution expected in Q4 FY27 subject to successful testing and approvals; Vadodara approved by NTPC Solar, NTPC Renewables, Tata Power, KPTCL and Punjab Transmission Company.
• 765 kV development running in-house in Unit 5 — first 765 kV reactor design commenced; the proposed international technology partnership could not progress due to sanction-related constraints, though the option remains open; production targeted Q4 FY27, completion/testing between Q4 FY27 and Q1 FY 2027-2028.
• CEA standardization aids market access — COO Anand Sharma noted that through CEA's intervention, 765 kV and 400 kV designs/specifications are standardized, so products per CEA guidelines will be acceptable to Power Grid and other customers without customization.
• IDT plant commissioning before end of Q3 FY27 — civil construction complete, machinery installation underway; adds ~5,000 MVA at planned capex of Rs.65 Cr; 33 kV IDT manufacturing shifts out of Unit 2, freeing it for 66 kV and 132 kV production.
• Tank and radiator backward integration via AE Components — groundbreaking completed; planned capex ~Rs.193 Cr (CMD cited Rs.196 Cr), commissioning targeted by October 2027 (FY 2027-2028); aimed at quality improvement and shorter supply timelines, not addressing any supply shortage.
• FY27 capex funded through internal accruals — long-term term loans tied up with banks but none availed; no other major capex planned beyond small staff-welfare projects.

First US Order; Exports Aspirationally 15% of Revenue by FY 2028-2029

• First US order secured for a specialty transformer — for a new transformer manufacturing facility to be set up in the United States; management called it a significant milestone in its international expansion strategy.
• Active US inquiries of ~120 transformers aggregating 9,300 MVA — as of Q2 FY27; management sees no tariff impact at the moment on inquiries being worked; US-bound products will be manufactured in India (no US facility).
• Exports aspired at ~15% of overall revenue within the next 2 years (by FY 2028-2029) — while exploring Europe and Africa; two potential long-term international partners identified; US strategy is brand-building through partners, explicitly not white-labeling, with initial US focus on 220 kV-and-below.
• US margins are "much better" — but management declined to commit to the 5-6% incremental gross margin benefit suggested by the Incred Equities analyst.
• Battery energy storage systems pipeline of ~3,400 MVA worth Rs.184 Cr — as of Q2 FY27, alongside renewable energy and industrial electrification; these segments expected to support future demand.

16-18% EBITDA Guidance Reaffirmed; 40% CAGR Through FY28

• EBITDA margin guidance of 16-18% reaffirmed for FY27 and FY28 — CFO Mehul Mehta said margins should sustain over Q3-Q4 FY27 at levels similar to Q1 FY27; H2-weighted execution plus operating leverage expected to lift the full-year average into the guided range (guidance given against an analyst citing an earlier 18-19% aspiration).
• Margin corrections expected in Q3 FY27 and "definitely" in Q4 FY27 — driven by better facility utilization toward the 80% optimum, economies of scale, and healthy order book margins.
• 40% CAGR commitment reaffirmed through FY28 — CMD Neeral Patel reiterated the listing-time commitment of 40% CAGR for the 3 years following the IPO with 16-18% stable margins; with 1 year elapsed, 2 years remain; the 40% CAGR applies to FY27 and FY28, not FY29, and management "still stands by" it.
• Growth will not be evenly distributed across quarters — management declined to confirm 40% YoY distribution, noting the business is cyclical with slow H1s and sharp, growth-heavy H2s; growth can be averaged year-on-year but not quarter-on-quarter.
• 40% CAGR excludes green energy corridor demand — CMD Patel clarified the commitment was set before any corridor announcements; corridors "will definitely improve the demand" and corridor-led growth would be over and above the guided 40% minimum for FY27 and FY28.
• No FY29 guidance — moderator Mohit Upadhyay stated it would not be appropriate to give any FY29 guideline at the moment.
• Demand context: management expects "huge numbers" of 400 kV and 765 kV transformers over the next several years — as intrastate demand shows up following the green energy corridor announcement (period unspecified); COO declined to quantify total industry demand for 400+ kV transformers, noting CEA and NEP data do not capture intrastate requirements; competition seen limited, with only a couple of players having completed capacity expansion.