Steel, Towers, and a Supercycle

Most power transmission contractors buy their steel towers. Transrail makes them in-house. On a 1000 crore contract, that gap is worth 40 crore of extra EBITDA. The stock trades at a discount to peers. Here is why that gap closes.

An equity research note on Transrail Lighting (NSE: TRANSRAILL), BUY at Rs. 598 with a 24-to-36 month target of Rs. 800. Probability-weighted return of +33 percent across bear, base, and bull cases. Three legs support the call: vertical integration into in-house tower fabrication captures 400 basis points of EBITDA margin per contract, India is entering its second power-transmission supercycle that takes the addressable annual market from Rs. 100,000 crore to Rs. 130,000 crore by FY28, and the stock trades at a discount to peers despite leading the group on growth, ROIC, EBITDA margin, and balance sheet leverage. Position sized at 4 percent of portfolio at starter level, 8 percent at full size.

• India
• Power
• Equity