TARIL's quarterly margin hits the 16% guided for the year, but plants and cash behind the next leg slip

Margin hit the guided 16%, and operating profit earned it

TARIL's operating margin last quarter was 16.1%. That matches the 16% the company guided for the year and is among the highest of the eight quarters in our table (the company reported 16.19% for the December 2025 quarter). A year ago the company put it at 8.8% (7.0% in our table).

Profit before tax is also now earned by the business itself. Other income, the profit that does not come from selling transformers, was a small share of profit before tax last quarter, against about a fifth the quarter before. Management credited fuller use of its Moraiya plant. This quarter's profit came from making transformers.

The guide needs a second half above the best quarter shown

On the call the CEO said the forecast is unchanged: the sales-growth guide for the year, as set out in July. That sounds like comfort, but the first half has already grown 35.0% on a year ago. Part of that is a weak base, because the year-ago quarter was depressed.

By our arithmetic, 25% on last year's sales leaves ₹863 crore a quarter for the second half. The second half must average more per quarter than any single quarter in the table; the best is ₹752 crore. The last guide ended short: in January management guided that financial year to about ₹2,600 crore of sales and a 16-17% EBITDA margin; the year printed ₹2,395 crore of standalone sales (consolidated about ₹2,509 crore, also short of that guide); on margin, the company reported 15.4% standalone EBITDA and about 17.7% consolidated, so the margin leg was met on the consolidated basis and missed on the standalone one.

Either the guide is low, as an analyst's question on the call implied, or the second-half plan is hard. Management's answers pointed both ways: the CFO said even the guide needs a little more per quarter than our figure, while the CEO said the target is that growth and beyond.

The plants meant to deliver it have moved again

In August last year management said the large Moraiya expansion would be operational within two months. By April it was to follow the monsoon. On this call the chief financial officer agreed with an analyst that the high-voltage plant is a matter for the year after this one. The CEO, Satyen Mamtora, said the work on Moraiya starts only after Changodar is done: "once we have finished this Changodar project, we start working on the Moraiya plant."

Changodar has moved too. In April it was to run from the second quarter; in July, from August; now commercial production is due around Diwali, which is the company's word and not a date. The in-house CTC (copper conductor) plant was targeted on the July call for commissioning by the second quarter of that financial year; the CEO now says commissioning in November, first trial in December and commercial manufacturing by the fourth quarter. The low end of the margin gain guided for the whole backward-integration programme was cut by half.

Debt has doubled while the plants wait

Borrowings were ₹545 crore at the end of September, more than double the level a year and a half earlier. Plants under construction, shown as capital work in progress, nearly doubled in six months.

Working capital, the money tied up in stock and unpaid bills, was still high last quarter. In January management said it should be near 120 days by March; the company then reported a figure that was still high. The goal of being net debt free within about two years, stated in August last year and again in January, was not mentioned on this call.

What would have to be true, and what we do not know yet

For the guide to hold, Changodar must start producing around Diwali, and the second half must clear the quarterly bar set out above at a margin near the level just reached. Raw material costs must keep passing through to customers, and the company said supply of some critical materials is still an issue. On the July call the company said the backward-integration plants are to be paid for from QIP proceeds, leasing, internal accruals and debt if required. On this call the CFO called the funding well planned and gave no figure for the QIP money left.

Demand is not the obstacle. Unexecuted orders were ₹7,275 crore at the end of September, though in January the company had guided to a higher figure by March. The orders are there; the plants that convert them are what is in question.

We do not know yet whether the second half will reach those quarters. The next quarterly result will show how far Changodar has come. Meanwhile the debt grew.