The Rs 9 lakh crore grid upgrade: 3 transformer stocks expanding capacity by up to 400%

India's power sector is entering one of its largest investment cycles in decades. The country is targeting 500 gigawatts (GW) of non-fossil power capacity by 2030. Macquarie's Equity Research estimates this to rise to 900 GW by 2035 as electricity demand continues to accelerate. However, building power plants is only half the story. Every megawatt of electricity generated must be transmitted across the grid. This creates an equally large opportunity for companies supplying transformers and other transmission equipment. The scale of this opportunity is significant. For every 1 gigawatt (GW) of new power generation, the grid requires 8-11 times additional transformer capacity across different voltage levels. To support this expansion, India has planned to invest around ₹9 lakh crore in transmission infrastructure by 2032. Tracking this demand, the domestic power transformer market is projected to grow from US$3.3 - 3.4 billion in FY25 to US$8.2-8.5 billion (around ₹80,000 crore) by FY29. This implies a strong multi-year growth runway. The opportunity is not limited to India. ALSO READWhy Ashish Dhawan and Sunil Singhania are betting big on 2 ignored healthcare stocks Macro Tailwinds: Grid Upgrades and Data Centre Demand A global shortage of transformer manufacturing capacity, coupled with rising investments in clean energy, grid modernisation, and data centres, has created a favourable demand-supply environment. Against this backdrop, several transformer and power equipment companies are witnessing strong earnings visibility. In this article, we look at three power stocks that are well positioned to benefit from India's expanding transmission network and the ongoing global power infrastructure cycle. #1 CG Power: How This Murugappa Giant is Powering India's Grid Upgrade CG Power, part of the Murugappa Group, is one of India's leading electric equipment and power companies. Its presence spans Industrial Systems (motors, railway signalling and traction equipment), Power Systems (transformers) and Emerging Technologies (Semiconductors). Revenue Breakdown: Power Systems Driving Profitability The company's standalone sales grew 16% year-over-year to ₹3,061 crore in Q1FY27. Of this, Industrial Systems revenue increased by 6% to ₹1,671 crore, accounting for 54.3% of revenue, and Power Systems revenue increased by 31% to ₹1,402 crore, contributing 45.7% of revenue. The remaining ₹12 crore is inter-segment eliminations and corporate adjustments. Power Systems is a higher-margin business (24.1%) compared to the Industrial segment (9.6%). Owing to the higher margin, Profit Before Interest and Tax (PBIT) is heavily weighted toward Power Systems, which generated 68.6% of total PBIT. The power segment received orders worth ₹3,106 crore during the quarter, and the order backlog stands at ₹14,434 crore. Capacity Expansion: Aggressive Timelines for Transformers The Power segment operates two main product verticals: transformers and switchgear. Power transformer capacity has increased from 22,000 MegaVolt-Ampere (MVA) to 75,000 MVA. Each unit is customised, and recent capacity expansion has improved lead times. Now, CG is building a new transformer plant, adding 45,000 MVA to capacity. This capacity was initially targeted for FY27-28, but CG is accelerating completion within 12 to 14 months. Commercial ramp-up is planned in phases, reaching at least 10,000 MVA in Phase 1 (Q1), 30,000 MVA in Q2/Q3, and reaching the full 45,000 MVA capacity. Management is also planning additional expansions beyond the 45,000 MVA project. On the switchgear side, on 4 June 2026, CG commissioned its new Extra-High Voltage (EHV) switchgear facility (S3 Unit-II) in Nashik, Maharashtra. This plant expands EHV capacity by 80%, bringing total capacity to 16,200 units per year. The plant manufactures EHV circuit breakers in the 33 Kilovolt (kV) to 245 kV range. Macro Tailwinds: Grid Upgrades and Data Centre Demand Management stated that demand for power transmission and equipment remains strong, supported by the acceleration of grid upgrades by state and central utilities. Furthermore, the construction of solar, wind, and other renewable energy capacity requires larger transformers and EHV switchgear to extract power. Sectoral Tailwinds: Solar, Wind, and Data Centres Additionally, artificial intelligence processing and digital infrastructure construction have generated significant demand for specialised high-capacity power transformers and electrical equipment. CG also maintains dedicated sales teams to capitalise on data centre opportunities. CG Power Share Price #2 Transformers and Rectifiers: The Power Stock Expanding Capacity by 200% Transformers and Rectifiers (TARIL) is a leading Indian manufacturer of power, distribution, and speciality transformers, as well as shunt and series reactors. TARIL manufactures a range of transformers for power generation, transmission, distribution, industrial, and renewable energy sectors. The company offers transformers across voltage classes from 5 kV to 1,200 kV and power ratings from 0.5 MVA to 500 MVA. TARIL operates three manufacturing plants in Gujarat, India, with a combined transformer manufacturing capacity of 75,000 MVA. TARIL is expanding its backwards-integration ecosystem to improve supply chain efficiency. Financial Performance: Subdued Margins Amid Expansion The company's consolidated revenue increased 8% to ₹572.3 crore. EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) increased 1% to ₹109.6 crore, while margins fell 134 bps to 19.2%. Consequently, net profit declined 4.7% to ₹64.3 crore. Robust Pipeline: Executing a ₹6,630 Crore Order Book The management said the slowdown was due to lower capacity utilisation (27%) at the Changodar Plant, driven by ongoing expansion and purely project-related. As of 30 June 2026, TARIL held an unexecuted order book of ₹6,630 crore (+26% year-on-year). Power transformers account for 80% of the order book. The current order book is executable in 18-24 months. Existing and expanded transformer capacity could support an annual execution potential of up to ₹6,000 crore. Additionally, the bid pipeline was ₹23,000 crore. Management maintains a historical win ratio between 10% and 15%. Inquiries are split between 80% domestic and 20% export. Management is targeting 30% growth in both domestic and export order inflows for FY27. Management is guiding for 25% revenue growth in FY27, with an EBITDA margin of 19-21%. TARIL aims to grow its top line to ₹8,000 crore by FY29, as capacity additions and backward integration stabilise. However, given the recent lower capacity utilisation, execution remains critical to achieving this target. The Changodar plant modernisation is fast-tracked for completion by August 2026. Plant utilisation is expected to reach 60-65% in FY27, and further increase to 80%-85% in FY28, boosting revenue execution from Q3 FY27. Expanding Backwards Integration to Boost Margins The company also plans to increase in-house component sourcing from the current 10-15% to 80-85% of total raw material needs. This is expected to expand EBITDA margins by 200-300 bps starting FY28. External sales of components are projected to generate an additional ₹800 crore to ₹1,000 crore in annual revenue. A key part is the in-house manufacturing of Continuously Transposed Conductors (CTC). CTC capacity is expanding from 8,000 metric tons per annum (MTPA) to 24,000 MTPA. However, muted growth over the last few quarters has led to higher inventory levels and a prolonged working capital cycle. TARIL Share Price #3 Atlanta Electricals: The Transformer Stock Driving a 4X Capacity Expansion Atlanta Electricals is a pure-play manufacturer of power, auto, and inverter-duty transformers in India. Atlanta operates five manufacturing facilities equipped with a combined manufacturing capacity of 63,060 MVA. This capacity is up 4X from 16,000 MVA over the past 18 months. The company manufactures a diverse range of transformers, starting from 5 MVA/11 kV up to 500 MVA/765 kV. The product portfolio includes Auto Transformers, Power Transformers, Inverter-Duty Transformers, Furnace Transformers, Generator Transformers, and Special-Duty Transformers. Q1FY27 Financials: Volume Execution Drives Margin Expansion Atlanta serves state and national electricity grids, private players, and prominent renewable energy companies. Atlanta's revenue from operations increased 48% year-on-year to ₹466.3 crore in Q1FY27, driven by higher volume execution. EBITDA was up 58.1% to ₹77.1 crore, while margin expanded to 16.5%. As a result, net profit surged by 50.4% to ₹46.8 crore. Record Order Book: ₹3,116 Crore Pipeline for FY27 As of 30 June 2026, the order book stood at an all-time high of ₹3,116.63 crore, with Atlanta winning ₹972.4 crore in orders in Q1 FY27. About ₹2,400 crore of the order book is scheduled for execution within FY27. Management expects order inflow momentum to peak during Q2 and continue through mid-Q3, in line with typical industry tendering cycles. Transformers rated at 220 kV constitute over 55% of the order book. By sector, transmission & distribution accounts for 66%, while in the revenue mix, Power Transformers contributed 79%. Management has long-term guidance of 40% revenue CAGR over the next three years. However, execution remains the key. Capacity Expansion: Targeting the EV and Renewable Boom To address supply deficits across key growth segments, Atlanta is constructing a standalone manufacturing plant (Unit 6) for Inverter-Duty Transformers. This facility will add approximately 5,000 MVA of manufacturing capacity. It is on track for commissioning by Q3FY27. The expansion specifically targets expanding demand from solar and wind renewable energy installations, battery energy storage systems, and electric vehicle (EV) charging infrastructure. It also supports backward integration to counter raw-material instability and secure supply chains. It is setting up a new tank-and-radiator manufacturing facility. Fabrication components such as tanks and radiators account for 4% to 5% of the total transformer manufacturing cost. During Q1FY27, Atlanta also received Power Grid approval to manufacture 400 kV-class transformers. Atlanta Share Price Valuation Check: Return Ratios vs Price Multiples Atlanta has a higher return on capital employed (ROCE) and return on equity (ROE) followed by CG Power and TARIL. In terms of valuation, CG Power is trading at a premium to the industry median and the historical three-year median. TARIL is trading at a discount to its historical median multiple but at a premium to the industry. ParticularsPrice-to-Earnings Multiple (X)Return RatiosCompany3Y MedianIndustryROE (%)ROCE (%)CG Power103.0102.332.520.526.7TARIL34.678.232.519.123.3Atlanta53.9NA58.531.745.3Source: Screener.in (As of 28 July 2026) The transformer industry is entering a phase where capacity creation is becoming as important as order wins. While all three companies are benefiting from the transmission capex cycle, their investment cases differ. CG Power offers scale and diversification, TARIL is a capacity expansion and margin improvement story, while Atlanta is emerging as a high-growth pure-play transformer manufacturer. ALSO READ4 stocks riding India’s gold loan boom – from the proven winner to the comeback story Investors should evaluate them based on execution, valuation, and the ability to convert expanding capacities into sustainable earnings. Keep these companies in your watchlist to analyse how they capture the industry tailwind. Disclaimer: Note: Throughout this article, we have relied on data from and the company's investor presentation. Only in cases where the data were unavailable have we used an alternative, widely accepted source of information. The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only. About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends. A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world. Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, their employees (s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities, or other related investments of issuers and/or companies discussed therein. The articles' content and data interpretation are solely the personal views of the contributors/ writers Investors must make their own investment decisions based on their specific objectives, resources, and only after consulting such independent advisors as may be necessary.