Supreme Power dropped its switchyard EPC strategy without explanation
The transformer maker guided for ₹275-300 cr revenue in FY27 after a capacity expansion, but the silent exit from a previously announced business line raises questions about strategic clarity.
What's new
- FY27 revenue target is ₹275-300 cr, representing 50% growth over FY26's ₹182 cr.
- The order book stands at ₹588 cr as of May 27, 2026, with 66.4% from non-government clients.
- The Kanhe facility in Chennai has expanded capacity from 2,500 MVA to 9,000 MVA.
Themes from the call
Demand
The ₹588 cr order book and peak power demand of 256 GW provide strong visibility for the transformer ramp.
Execution
The Kanhe facility contributed only ₹20-25 cr to FY26; the ramp to ₹500-550 cr potential depends on solving labor deployment over 2-4 months.
Margin
FY26 EBITDA margin fell 1-1.5% to 18.3% due to commodity inflation, though price variation clauses and a planned tank factory capex aim at recovery.
Guidance watch
- FY27 revenue guided to ₹275-300 cr, with Q1 expected lower at ₹50-60 cr and acceleration in Q2-Q3.
- FY28 incremental revenue guided at ₹100 cr (total ₹375-400 cr), tied to facility utilization scaling.
- PAT margin guidance of 10-12% at full capacity, reflecting higher gross margins on larger transformers offset by overhead.
Risk flags
- The unexplained abandonment of the switchyard EPC strategy announced in 2024 creates a credibility gap for future strategic guidance.
- The new Kanhe facility's ramp is constrained by labor, with a 3-4 month productivity lag after deployment.
- Q1 FY27 is guided to be seasonally weak at ₹50-60 cr, making the full-year target dependent on a strong H2.
Key quotes
-
"We have fixed a target to achieve between 275 and 300 crores for FY27."
— V. Rajmohan, Chairman and Managing Director -
"First, we secured an order worth of INR26 crores... This order marks our entry into switchyard construction and commissioning."
— V. Rajmohan, CMD, Oct 2024 call
The brief
Supreme Power Equip's June 2026 earnings call presented a clear, focused story: a dedicated transformer manufacturer riding a capex cycle with a ₹588 cr order book and a new Chennai facility. The problem is the story that was dropped. In October 2024, CMD V. Rajmohan said a ₹26 cr order marked the company's entry into switchyard construction, framing it as a strategic expansion into high-voltage EPC. That entire business line is now gone from the company's description. No one asked why, and management did not offer an explanation.
The numbers on the core business are solid. FY26 revenue grew 21.8% to ₹182 cr, and the ₹275-300 cr guidance for FY27 implies 50% growth. The Kanhe facility's 9,000 MVA capacity gives it room to reach ₹500-550 cr at full utilization. But the facility contributed only ₹20-25 cr in FY26, and the ramp depends on solving a labor constraint that has a 3-4 month lag. The new tank manufacturing capex of ₹22-25 cr is a sensible backward integration play, but its margin benefit of 0.5-1% won't arrive until FY28.
The core tension is credibility. When a company announces a new strategic direction and then silently drops it without explanation, the remaining guidance becomes harder to underwrite. The transformer business appears to be in a genuine upcycle. The question is whether Supreme's management can be relied on to tell you what it's actually doing.
The transformer boom is real, but a silently abandoned strategy makes the company's own story harder to trust.