From solar farms and wind projects to AI data centres and electric vehicles, the country’s next phase of electrification is creating an unlikely infrastructure winners which are transformer manufacturers. Shilchar Technologies’ FY26 annual report offers a glimpse into how the industry is transforming.
When people talk about India’s infrastructure boom, the conversation usually revolves around highways, airports, renewable energy projects, data centres and semiconductor plants. But there is a less visible piece of infrastructure sitting behind many of these investments: the transformer.
As India adds renewable power, expands transmission networks, electrifies transport and industry and prepares for a surge in electricity demand from data centres and artificial intelligence, transformers are becoming increasingly critical to the country’s power infrastructure.
The FY26 annual report of transformer maker Shilchar Technologies captures this shift particularly well. The company says transformer demand strengthened during the year as a result of investment in power generation, transmission and distribution, while renewable energy provided another major source of orders.
India added 55 GW of renewable capacity in FY26, according to the company’s annual report. Shilchar added this supported demand for its inverter duty transformers used in solar projects and generator transformers used in wind projects.
“Demand for transformers strengthened steadily through the year, driven by sustained investment across power generation, transmission, and distribution. Rising electricity consumption, the modernisation of the grid, and the utility-scale shift to renewable energy all supported this momentum,” Shilchar said in the annual report 2025-26.
But renewable energy is only one part of the story.
The AI connection nobody talks about
The rapid expansion of artificial intelligence is creating a new and potentially significant source of demand for electrical equipment. AI data centres consume enormous amounts of electricity. As hyperscalers and other operators build larger facilities, electricity has to be brought into these campuses, transformed to the required voltage and distributed reliably across thousands of servers and other equipment.
That makes transformers an important part of the AI infrastructure stack. Shilchar’s annual report identifies the expansion of data centres as one of the forces reshaping the global transformer market. It said the industry is experiencing a “structural tightening of supply” as manufacturing capacity struggles to keep pace with demand from renewable connections, electrification and data centres.
The report goes further, saying that the growth of AI led data centres is expected to add materially to transformer requirements in the coming years. That is an important insight for India’s technology infrastructure story. The AI boom is therefore not just a story about GPUs, servers, cooling systems and data centre buildings. It is also creating demand further upstream in the electricity infrastructure chain.
India’s power grid is getting bigger
The underlying opportunity extends beyond data centres. India needs to transmit electricity from new generation projects to consumption centres, integrate intermittent renewable generation into the grid and strengthen ageing transmission and distribution networks. The Shilchar report cites India’s National Electricity Plan, which envisages close to Rs 9.2 lakh crore of transmission investment during FY23 to FY32, alongside more than 191,000 circuit kilometres of transmission lines and 1,270 GVA of transformation capacity at 220 kV and above.
This creates a long runway for transformer manufacturers. The company also identifies several emerging sources of demand, including data centres, electric vehicle charging infrastructure, green hydrogen, battery storage and railway electrification. In other words, the addressable market for transformers is expanding beyond conventional power generation.
Renewable energy multiplier
Renewables create a particularly interesting transformer opportunity. Solar and wind projects do not simply generate electricity and feed it directly into the national grid. The electricity needs to be converted, stepped up and transported through transmission networks. As renewable capacity grows, so does the need for equipment that can connect those projects to the grid.
Shilchar said it supplies inverter duty transformers for solar projects and generator transformers for wind projects. It also serves hydro power and other industrial applications. The solar module or wind turbine may get the attention. The transformer quietly enables the electricity to travel.
A global transformer shortage is emerging
The opportunity is not restricted to India. According to Shilchar’s annual report, years of underinvestment in transformer manufacturing capacity have coincided with rising demand from renewable energy, electrification and data centres. The result is longer delivery timelines and customers securing production slots ahead of time.
The company said this combination of firm demand and constrained supply has supported pricing and lengthened order books across the industry. This is significant because transformers are not necessarily products that can be manufactured overnight when demand suddenly rises.
Manufacturing capacity, specialised engineering, testing facilities and customer approvals all take time to build. That creates an opportunity for established manufacturers that already have the capability to supply specialised equipment.
The broader industry data supports this trend. The Indian Electrical and Electronics Manufacturers’ Association said the power transformer segment grew 31.6% in FY26, while the overall electrical equipment industry grew 12.6%. Power transformer growth reached 58.5% in the fourth quarter.
Betting big on this cycle
Shilchar’s response to the opportunity is a major capacity expansion. The company’s Gavasad facility currently has annual production capacity of 7,500 MVA. Its latest expansion will add another 6,500 MVA, taking total capacity to 14,000 MVA by April 2027.
The project involves a capital outlay of around Rs 120 crore and is being funded entirely through internal accruals. More importantly, the expansion will take the company into the 220 kV class for the first time.
That matters because moving into higher voltage products allows manufacturers to address a larger segment of the transmission market. The company says the new facility will begin contributing from FY28 as higher voltage approvals are secured and the new lines fill with orders. And Shilchar is not stopping at 14,000 MVA.
Its annual report added that the company aims to eventually scale manufacturing capacity to 25,000 to 30,000 MVA.
Exports story
One of the less obvious aspects of India’s transformer opportunity is its export potential. Shilchar operates in more than 25 countries across five continents, with exports accounting for more than 48% of revenue.
In FY26, the company reported revenue of Rs 651.94 crore, including approximately Rs 314.92 crore from exports. Europe and the Middle East contributed Rs 195.10 crore, while North America contributed Rs 99.34 crore. India accounted for Rs 337.02 crore.
This is important because the global transformer shortage could create opportunities for Indian manufacturers to become part of international supply chains. Shilchar’s report says Indian manufacturers are benefiting from the global shortage of transmission and distribution equipment, the expansion of manufacturing bases by global OEMs in India and the growing credibility of Indian companies in higher voltage classes.
The financial numbers tell another story
Shilchar’s FY26 revenue increased about 5% to Rs 651.94 crore. EBITDA rose to Rs 190.42 crore, while profit after tax increased 8% to Rs 158.16 crore. More strikingly, over the previous five years, revenue, EBITDA and profit after tax have compounded at 38%, 77% and 83%, respectively.
The company also remains debt free, with Rs 246 crore of cash and cash equivalents at the end of FY26 and operating cash flow of Rs 192 crore. That balance sheet gives it the ability to finance the current expansion without taking on debt. Shilchar
But the transformer boom comes with risks
The opportunity is significant, but the industry is not immune to volatility. Transformer manufacturers are exposed to copper, transformer oil and special electrical steel prices. Shilchar added that these materials are important inputs and several are imported, making currency movements another risk. The company also experienced this during FY26.
US tariff uncertainty reduced order intake from American customers, while the West Asia crisis disrupted shipments to Middle Eastern customers. Lower exports also affected the company’s quarterly margin because exports carry higher margins. Transformer oil prices rose sharply during March, adding further pressure.
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