Tracing the Growth: What Drove Alfa Transformers’ 920% Rise in 3 Years

One of the most abided rules of investing is identifying and holding a good stock for the long term. For the investors of Alfa Transformers Limited, this strategy turned fruitful when the stock jumped from Rs.8 in 2022 to Rs.81.73 in 2025 (closing price as of 11th April 2025). 

Though the stock garnered 13.67% in the past month owing to the constant fluctuations, Alfa Transformers Limited grew 920.35% over the last three years as of 14th April 2025. The stock recorded a 10% intraday gain on the same date despite the lingering broad sectoral decline in the capital goods segment. What caused the rally, and what made the stock resistant in the long run? Let’s understand.

Overview Of Alfa Transformers Limited:

Incorporated in 1982, Alfa Transformers Limited is a Bhubaneswar-based manufacturer of power and distribution transformers. With over four decades of presence in the electrical equipment sector, the company has built a strong footprint both in domestic and international markets. Its manufacturing capabilities span two well-equipped units located in Bhubaneswar and Vadodara, capable of producing up to 10 MVA and 36 KV class transformers. The company’s product line includes:

• Single and Three-phase Transformers
• Power Transformers (up to 15 MVA, 36 KV)
• Energy-Efficient and Low-Loss Transformers
• Special Duty Transformers for Induction Furnaces, ARC, and Submerged ARC Furnaces
• Stabilized Output Transformers
• Step Lap CRGO and Amorphous Metal Alloy Core Laminations

Over the years, Alfa has diversified into project exports and technical consultancy services, strengthening its business portfolio. The company has consistently served reputed clients in public and private sectors, including names like Odisha Power Transmission Company, Bhabha Atomic Research Centre, Department of Atomic Energy, and Reliance Jio Infocomm. Internationally, it has established a strong presence in UAE, Libya, Suriname, Nepal, and Egypt. It has maintained ongoing supply relationships with utilities such as GECOL in Libya and the Dubai Electricity & Water Authority.

Revenue Trend Of Alfa Transformers:

The company’s profits have grown over the last five years as it moved from a string of losses in FY2020 to a profitable financial year in FY2024 with a net profit of Rs.7.63 crore. Several factors account for these profit fluctuations. The decline in operating profit and overall profitability margins experienced in FY21 was primarily due to the lower revenue generated during the pandemic-induced disruptions and elevated operational expenses.

The subsequent improvement in financial performance, leading to profitability in FY23 and continued growth in the first half of FY24, was largely driven by a higher volume of order execution and a better liquidity position, which was supported by the infusion of funds from the promoters and improvement in the effective collection of receivables.  (Source: Care Ratings Press Release)

While the annual profit trend is positive, the recent quarterly data reveals a sequential decline in net profit despite a strong year-over-year growth in the latest quarter. In Q3 FY2024-25, Alfa Transformers posted a net profit of Rs.0.40 crore, up 81.82% YoY but down 59.18% from Rs.0.98 crore in the September 2024 quarter. Despite higher sales, that Q2 profit was already 83.81% lower than the Rs.6.06 crore reported in Q2 the previous year. EPS also dropped sharply from Rs.6.62 to Rs.0.10 YoY, and the company reported a net loss of Rs.0.25 crore in Q1 FY2024-25. 

Overview Of Current And Future Projects

Alfa Transformers continues strengthening its core business of designing, manufacturing, and selling power and distribution transformers, with capacities ranging from 10KVA to 10MVA. The company has demonstrated consistent business traction through notable order wins across its two manufacturing facilities in Bhubaneswar and Vadodara.

The list of significant orders includes the purchase order of Rs.27.39 crore from the Gujarat Electricity Board. In January 2025, the company bagged multiple purchase orders worth Rs.5.41 crore for a range of transformer products. Later, in February 2025, the company secured a domestic order worth Rs.1.25 crore from TP Western Odisha Distribution Limited, to be executed within 67 days. 

Financials & Valuation To Consider For Alfa Transformers Limited

Investors looking to invest in Alfa Transformers should evaluate the company’s financial health and key performance metrics before making any decisions. Other factors to consider for the same, apart from the revenue and profit trends, include the following-

1. The company’s market capitalization is Rs.74.8 crore (11th April 2025). 
2. Valuation metrics such as the Price-to-Earnings (P/E) ratio of 60.05 and Price-to-Book (P/B) ratio of 3.09 suggest that the stock is trading at a premium, particularly when compared to industry averages (sector P/E= 50.06).
3. CARE Ratings and CRISIL assigned the “ISSUER NOT COOPERATING” status to the company’s credit ratings in September 2023. This designation indicates that Alfa Transformers has not provided the necessary cooperation for rating agencies to conduct a detailed and up-to-date evaluation of its creditworthiness. (Source: Care Ratings Press Release)
4. The key financial ratios of the company paint a mixed picture-

Financial Year	Debt-to-Equity Ratio	Current Ratio	ROCE (%)
FY2020	0.41	1.17	-18.69
FY2021	1.27	1	-28.27
FY2022	-20.01	0.72	-16.58
FY2023	5.55	1.27	7.6
FY2024	0.98	1.4	11.24

The company has shown marked improvements in profitability, reflected by an increase in Return on Equity (ROE) and Return on Capital Employed (ROCE) in FY2024. Its current ratio has also improved, reflecting better liquidity. However, the fluctuating debt-to-equity ratio, particularly the negative value in FY2022, raises concerns about its financial leverage and risk. Investors should monitor future financial statements for greater clarity on these trends.

Bottomline:

Alfa Transformers has demonstrated impressive growth, with its stock price skyrocketing by 920% over the past three years. The company’s strong market position, successful order wins, and improved financial performance over the past year highlight its potential. However, concerns about its premium valuation and the lack of cooperation with rating agencies pose risks for potential investors. You should carefully analyze the company’s financial health, quarterly performance trends, and any future updates before making investment decisions. Remember, thorough research is always the best approach to investing.

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