Profitability ratios are key financial metrics that assess a company’s ability to generate earnings relative to its revenue, assets, equity, or capital. These ratios provide insights into how efficiently a company converts its operations into profits and are crucial for evaluating financial performance over time.
This article delves into an analysis of profitability ratios of Transformers and Rectifiers (India) Limited (TARIL) for Q4 FY25 and the full year FY25, providing insights into its financial health and operational efficiency.
With a market cap of Rs. 14,717 crores, the shares of Transformers & Rectifiers (India) Limited surged nearly 2.27 percent on BSE to Rs. 498 on Friday. The stock has delivered positive returns of around 34 percent in one year. However, it has given a negative return of about 5 percent in one month.
Profit After Tax (PAT) Growth
TARIL posted a higher PAT of Rs. 94.2 crores in Q4 FY25, reflecting a robust QoQ growth of 70 percent from Rs. 55.5 crores in Q3 FY25 and a 124 percent YoY surge from Rs. 42 crores in Q4 FY24.
For the full fiscal year, the company’s net profit grew by a massive 357 percent from Rs. 47.4 crores in FY24 to Rs. 216.6 crores in FY25. Over the three-year period from FY22 to FY25, net profit has grown at an impressive CAGR of 149 percent.
Profit After Tax (PAT) Margin
The company also saw a steady rise in profitability margins. Its PAT margin climbed to 13.78 percent in Q4 FY25, significantly up from 9.77 percent in Q3 FY25 and 8.16 percent in Q4 FY24, showing a notable improvement in its margin profile. Additionally, the company’s net profit margin stood at 10.56 percent in FY25, as compared to 3.65 percent in FY24.
EBITDA growth
TARIL demonstrated healthy growth, with Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) rising to Rs. 138.2 crores in Q4 FY25 from Rs. 73 crores in Q4 FY24, registering a YoY increase of around 90 percent, and a 47 percent QoQ jump from Rs. 94 crores in Q3 FY25. Meanwhile, for the full year, the company’s EBITDA grew by 157 percent YoY from Rs. 134 crores in FY24 to Rs. 359 crores in FY25.
EBITDA margin
Its EBITDA margin also expanded, reaching 20.22 percent in Q4 FY25, significantly up from 16.5 percent in Q3 FY25 and 14.2 percent in Q4 FY24, showing a notable improvement in its margin profile. On an annual basis, the margin stood at 17.51 percent in FY25, as compared to 10.76 percent in FY24.
Return Ratios – RoE, RoCE and RoA
Return on Equity (ROE) nearly doubled to 17.11 percent in FY25 from 8.02 percent in FY24, indicating a positive turnaround in equity efficiency. Further, the company witnessed a considerable improvement, registering a Return on Capital Employed (ROCE) of 24 percent in FY25 against 18.31 percent in the previous fiscal year. In terms of asset utilisation, TARIL saw a significant improvement, increasing its Return on Assets (ROA) to 9.8 percent in FY25 from 3.8 percent in FY24.
Earnings Per Share (EPS)
Backed by strong profitability, EPS also saw a meaningful rise. For FY25, TARIL posted an EPS of Rs. 7.21 in FY25 compared to Rs. 1.64 in FY24. In Q4 alone, EPS was Rs. 3.17, up from Rs. 1.85 in Q3 FY25 and Rs. 1.46 in Q4 FY24.
Transformers & Rectifiers (India) Limited (TARIL) is engaged in the business of manufacturing power, furnace, and rectifier transformers. It offers a wide range of transformers: power transformers, distribution transformers, furnace transformers, rectifier transformers, and shunt reactors, which have applications in the power transmission and distribution sector and other industrial sectors.
Written by Shivani Singh
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