When you hear the word “Transformer,” you might picture a humming grey box behind your building. This electrical device is the backbone of energy systems that keep your lights on and appliances running.

Technologies like IoT, automation, and data analytics has fueled a bull run in the power sector. Power companies adopted these tools to increase efficiency and lower costs, leading to strong growth in electricity generation, transmission, and distribution businesses.

In the shadows of the tech boom and green revolution, transformer shares have become investors' darlings in the last five years. In this edition of Chart of the Week, we examine the five-year returns of transformer stocks and analyse the key factors driving their strong growth.

The ongoing upgradation of power lines in India and North America has created a stable growth phase for transformer makers. Visweswara Reddy, chairman of Indo Tech Transformers, said, “Unlike earlier cycles where demand peaked for 3–4 years and then dipped, the current phase is more stable and should last 12–15 years, supported by transformer replacements in India and North America.”

Due to rising energy demand, transformers are facing a similar shortage to that of Nvidia’s GPU chips. 

Ashish Agarwal, Head of Solar and Storage at BluePine Energy, said, “Rapid growth in railways, transmission upgrades, and renewable projects has raised transformer demand and pricing. Indian engineering, procurement, and construction (EPC) contractors executing overseas projects are boosting exports by leveraging the local supply chain.”

The global transformer market reached $76.4 billion in FY24 and is projected to reach $101.4 billion by FY29 due to increased demand from industries, data centers, and households. The Nifty Energy index has gained 193% in the past five years.

This growth in power consumption has increased demand for transmission infrastructure projects and boosted the earnings of transformer manufacturers like Transformers & Rectifiers, Voltamp Transformers, and Shilchar Technologies.

Government initiatives such as the Export Promotion Mission, National Manufacturing Mission, and Production Linked Incentive (PLI) encouraged domestic manufacturing and increased transformer exports.

Transformer makers power up capacity amid surge in orders

Rising power demand and steady government capital expenditure have pushed transformer makers to expand capacity, with large orders from industrial and utility segments driving growth. 

Transformers and Rectifiers, a heavy electrical equipment industry player, leads specialty transformer manufacturing with a 25% market share. Its share price has risen 14,468% in five years, driven by an order book that grew at a CAGR of 35.8% and increasing government projects.

As of March FY25, the order book stood at Rs 5,132 crore. Foreign institutional investors (FII) raised their stake by 6.8% YoY in Q4FY25.

The company plans to increase operational efficiency through backward integration to reduce risks from price volatility and supply disruptions. 

Management aims to achieve Rs 8,200 crore in revenue by FY28. Satyen Mamtora, MD of Transformers & Rectifiers, notes, “We are improving margins through operational efficiency and enhancing production capacity by reducing supply chain risks through backward integration. We expect FY26 revenue of Rs 3,500 crore with 15–16% profit margins.”

Voltamp Transformers holds a 15% share in the organized industrial application transformer market. Since FY20, its share price has risen 833%, and revenue has grown at a CAGR of 18.2% to Rs 2,018.9 crore in FY25, driven by diversification across data centers, oil & gas, infrastructure, and renewable energy sectors.

The company improved its net profit margin from 10% in FY20 to 16.8% in FY25, helped by higher sales of industrial transformers rated above 5 MVA and better pricing. It plans to invest Rs 200 crore to expand its manufacturing facility to produce up to 250 MVA transformers.

CG Power and Industrial Solutions derives 36% of its revenue from the power system business vertical, including the transformer business. The company increased transformer sales by implementing IoT-enabled transformers to improve efficiency, and introduced high-voltage current transformers above 800 kV. These features attracted orders from private and public companies, growing the order book at a CAGR of 42.8% in the past five years to Rs 9,909 crore.

The company plans to invest Rs 712 crore to expand transformer manufacturing capacity by 45,000 MVA, increasing total capacity to 85,000 MVA by FY28 for extra-high voltage applications. Major customers include Power Grid, Tata Power, NTPC, Larsen & Toubro, Sterling Wilson, and SPML Infra.

Ajay Jain, vice president of CG Power and Industrial Solutions, said, “We expect double-digit growth in the distribution transformer market in the next few years. We are focusing on the industrial segment, so we are investing in that segment for capacity expansion.”

Export growth lifts transformer makers' earnings

Indian transformer manufacturers are shifting their focus to international markets to increase margins and reduce dependency on local demand. Indian companies remain unaffected by tariff impacts, as most supply transformers to the Middle East and Europe.

Additionally, with support from the government’s National Manufacturing Mission, companies like Shilchar Technologies and Hitachi Energy are expanding exports of medium and high-voltage transformers to Southeast Asia, Africa, and Latin America.

Shilchar Technologies has been a standout performer, with its shares rising from the FY20 low of Rs 48 to an FY25 high of Rs 14,380, gaining 14,958%. The company shifted its product mix toward customizing transformers for renewable energy projects. This strategy improved pricing and boosted sales.

Export contribution doubled from 23% in FY20 to 50% in FY25 by entering new markets, including North America, Europe, and several countries in the South Asian market, and improved profitability driven by price gains.

On the export outlook and tariff risks, Alay J. Shah, MD of Shilchar Technologies, said, “North America accounts for about 20% of our exports, with the remaining primarily from the Middle East and North Africa. We remain confident that potential US tariffs will have minimal impact. We will monitor the situation closely as the 90-day tariff pause ends and adjust our strategy if needed.”

Apar Industries leads the power transformer oil segment with a 60% market share. Its shares have risen 2,547% in the past five years, driven by an order book that grew at a CAGR of 29% to Rs 7,163 crore.

The company ranks as the world’s third-largest transformer oil manufacturer. It exports transformer oils to 95 countries. Higher realizations from global markets have raised their international revenue share from 37% in FY20 to 44% in FY25.

Hitachi Energy manufactures 315 MVA transformers, and its shares have risen 1,805% over the past five years. The company reduced reliance on the domestic market by expanding exports of high-margin ultra-high-voltage transformers, with export contribution to order inflows rising from 18% in FY20 to 40% in FY25,  leading to the net profit margin improvement from 2.9% to 6%. 

The company’s order book grew at a CAGR of 43%, reaching Rs 19,245 crore, driven by rising orders from industries, transportation, and data centers. Strong traction drove domestic institutional investors (DII) to increase their stake by 3.3% year-on-year in Q4FY25. 

To capitalize on the growing demand, Hitachi Energy plans to invest around Rs 2,000 crore over the next 4-5 years to expand manufacturing of large power transformers, focusing on customized units for renewable projects and government work orders.

N Venu, CEO of Hitachi Energy India, notes, “Hitachi Energy India's primary focus continues to be the domestic market, supported by a strong pipeline across renewables, transmission, energy storage, and data centers. The company aims to maintain double-digit EBITDA margins in FY26.”