Supreme Power Equipment Limited

Q&A

Q1: Despite higher raw material costs and elevated inputs, how did the company achieve a gross profit margin improvement to 28.82% this quarter compared to 23.80% in previous quarters?

A: The improvement was driven by price variation clauses included in buyer contracts. These clauses allowed raw material price increases (caused by geopolitical issues) to be passed through directly to customers, protecting and maintaining margins. Roughly 80% to 85% of the order book is covered under price variation clauses.

Q2: What is the guidance for EBITDA margins, PAT margins, and revenue growth for the full year FY27 and going forward?

A: EBITDA margins are expected to be maintained between 18% and 20%, while PAT (net profit) margins are projected to settle around 9% to 12% (target: 10%–12%). Revenue for FY27 is expected to be between ₹250 crore and ₹300 crore, with a minimum year-on-year revenue growth guidance of 30% thereafter.

Q3: What is the company's current total order book and product/customer breakdown?

A: The total order book stands at ₹590.06 crore as of August 13, 2026.

1. Customer Mix: Government orders account for ₹177.66 crore (~30.10%) and non-government orders account for ₹412.46 crore (~69.90%).
2. Product Mix: Power transformers make up ₹453.83 crore (~76.91%), distribution transformers ₹105.27 crore (~17.84%), and inverter duty transformers ₹30.96 crore (~5.25%).

Q4: What is the current status and capacity utilization of the new Kannur manufacturing facility?

A: The Kannur plant became operational in mid-January, raising overall manufacturing capacity to ~9,000 MVA with capabilities up to 200 MVA / 220 kV. Utilization currently stands at 20% to 25% and is expected to ramp up to 30%–50% by Q4 FY27.

Q5: What is the expected order inflow for the remainder of FY27?

A: The company expects to secure another ₹300 crore to ₹500 crore worth of orders during the remainder of the year, which are currently in various stages of bidding and negotiation.

Q6: Why is top-line guidance for FY27 set at ₹250–300 crore if ₹377 crore of the ₹590 crore order book has scheduled delivery before March?

A: Delivery schedules often shift due to project delays or extensions requested by buyers. To avoid maintaining unsold inventory on site, production is aligned strictly with customer delivery readiness. Thus, a conservative revenue guidance of ₹250–300 crore is provided.

Q7: What caused the multi-fold growth in employee benefit costs and other expenses in Q1 FY27 compared to Q1 FY26?

A: In Q1 FY26 (June 2025), no staff had been deployed for the new plant. Since the new facility is 6 to 7 times larger than Unit 1, workforce deployment increased from 60–80 people to over 250 employees, driving up labor and operational overheads.

Q8: What are the expected working capital cycles for inventory and debtors given the growing scale?

A: The company maintains an inventory holding period of around 2.5 months. The debtor collection cycle is expected to range between 80 to 100 days. Higher working capital limits have been approached through bank credit facilities.

Q9: What is the roadmap for migrating from the SME board to the Main Board of the stock exchange?

A: The eligibility window opens after December. The company has already begun paperwork and aims to complete the Main Board migration by Q4 of this financial year / early next year.

Q10: What is the long-term peak revenue potential for the current combined facilities, and by when can it be achieved?

A: Peak potential revenue from Unit 1 and the expanded Kannur facility combined is estimated at ₹600 crore to ₹650 crore, which the management believes is achievable by FY29.

Q11: Will the company require equity dilution to fund future growth targets?

A: There is no equity dilution planned for the current financial year (FY27) as bank debt limits are adequate. However, equity funding/dilution may be evaluated for FY28 to support larger ambitions.

Q12: What is the update on the proposed tank manufacturing backward-integration capex?

A: Land was acquired a year ago, and final statutory approvals from 6–7 departments are expected shortly. The capex is estimated at ₹20–22 crore, which will be funded via bank term loans. Construction is slated to wrap up before March.

Q13: What is the status of entering the high-demand data center market segment?

A: While no direct orders have been secured yet for FY27, the company is actively approaching data centers. Having recently secured 165 MVA orders from KPTCL, completing design validation and short-circuit type testing will allow them to cater to requirements between 100 MVA and 200 MVA. Data center order execution is anticipated to start in FY28.

Q14: What is the outlook on global and domestic demand for transformers in the 220 kV class?

A: Demand is extremely strong both in India and globally, driven by power transmission, renewable integration, and industrial expansion. Because manufacturers in the up-to-220 kV class are relatively few, management expects market demand to remain elevated for at least the next 10 years.

Strategic Outlook

1. Timely execution of the existing ₹590.06 cr order book is the immediate priority, with the current pipeline providing visibility for the coming quarters. Orders secured in Q1FY27 are scheduled for execution over 7–17 months.
2. The company intends to progressively ramp up utilisation at its new manufacturing facility, which is expected to support higher production capacity and enable the business to cater to its growing order pipeline.
3. Geographic expansion will remain an important growth lever, with the recent entry into Maharashtra complementing the company’s presence across Karnataka, Hyderabad and New Delhi. This should help diversify its customer and regional exposure.
4. Management remains focused on improving operating leverage as the scale of operations increases. Better procurement, pricing discipline and manufacturing efficiencies are expected to support sustainable profitability.
5. Continued order inflows remain critical to sustaining growth momentum, with Q1FY27 order wins of ₹195.64 cr demonstrating healthy demand for the company’s transformer solutions.
6. Management remains focused on scaling the business in a measured manner while balancing capacity utilisation, order execution and profitability. The combination of enhanced capacity, a strong order pipeline and expanding geographic footprint supports the medium- to long-term growth outlook.

Business Strategy

1. Supreme Power Equipment focuses on manufacturing power and distribution transformers, with around three decades of industry experience. Its product capabilities include transformers designed for applications such as windmills and challenging switching and voltage conditions.
2. The company is pursuing geographic diversification by expanding beyond its established markets into states such as Maharashtra, Karnataka, Telangana and Delhi. This approach is aimed at building a broader and more diversified customer base.
3. SPEL is focusing on securing larger transformer orders from EPC companies and other customers, with recent orders spanning 20 MVA, 112.5 MVA and 160 MVA transformers. The mix provides a sizeable execution pipeline across multiple projects.
4. Management is maintaining a disciplined approach to pricing and procurement while focusing on operational efficiency. As manufacturing scale increases, the company aims to derive greater operating leverage and improve execution efficiencies.
5. The company is leveraging its manufacturing capabilities and established industry experience to build a strong order pipeline. More than 21,367 transformer units have been manufactured and supplied, supporting its track record in the sector.
6. SPEL is adopting a measured growth approach, balancing capacity expansion with order execution and utilisation ramp-up. The strategy is focused on converting its sizeable order book into revenue while maintaining profitability and operational discipline.

Key Highlights

1. The company secured 10 orders during Q1FY27 aggregating ₹195.64 crs, with execution timelines ranging from 7–17 months. This has strengthened revenue visibility and supports the growth outlook.
2. The consolidated order book stood at over ₹590.06 crs as of August 13, 2026, providing strong execution visibility over the coming quarters and a healthy pipeline for future revenue growth.
3. The company expanded its geographic presence into Maharashtra during the quarter, including a ₹13.50 crs order for 20 MVA power transformers from an EPC company, broadening its customer base across key markets.
4. Margins moderated during the quarter, but profitability remained healthy. Management continues to focus on disciplined pricing, procurement and operational efficiency to improve execution economics as manufacturing scale increases.
5. The company is progressing with its enhanced manufacturing capabilities and plans to progressively ramp up utilisation at its new facility. Management expects higher capacity and operating leverage to support measured and sustainable growth.

Performance

Q1 FY27:

1. Revenue from operations: ₹48.23 crs (↓73.45% YoY)
2. EBITDA: ₹8.81 crs | EBITDA Margin: 18.27% (↑20 Bps)
3. PAT: ₹4.90 crs | PAT Margin: 10.16% (↓109 Bps)

FY26:

1. Revenue from operations: ₹148.72 crs
2. EBITDA: ₹28.25 crs | EBITDA Margin: 18.99%
3. PAT: ₹18.60 crs | PAT Margin: 12.51%