Exclusive: Why are Transrail Lighting shares down 40% despite growing more than industry?

Synopsis: Transrail Lighting’s shares have fallen nearly 40 percent despite steady execution and guidance to grow faster than the industry. In an exclusive interview, the management highlights ongoing capex, strong demand drivers, and improving performance, suggesting the decline may be driven more by market caution than any weakness in the business fundamentals.

Despite planning to grow faster than the industry and continuing to deliver steady performance, shares of Transrail Lighting have fallen nearly 40 percent from their highs, raising questions among investors. In an exclusive interview with the management, we try to understand why the stock is under pressure, what the company is doing to drive growth, and whether the market is missing something important.

Capex Push Underway

On the company’s capital expenditure plans and capacity outlook, the management highlighted that Transrail is currently in the middle of a significant expansion phase aimed at strengthening its execution capabilities.

The management said, “…almost 15 months since our IPO, we have a very detailed, major CAPEX expansion, especially for our factories, as well as for our other tools and equipments that we are sort of laid down.”

Providing more clarity on the scale of investments, the management added, “There were two board approvals; so, in total, more than 500 crores is what we have been doing. I think in the next six to eight months, most of it will be sort of concluded.” The management further explained the impact of this expansion, noting that, “So with that, we will be doubling our tower and conductor capacity.”

Looking beyond the current expansion cycle, the management indicated a moderation in capital intensity, stating, “Now, after that all this is done, I think, obviously, we would have less CAPEX requirements immediately after that. You know, so in the next two to three years, we should be working with the existing set of factories and equipment.”

Data Centres Add Demand, But Broader Power Consumption Remains The Real Driver

On the opportunity arising from data centre growth and its impact on transmission infrastructure, the management acknowledged that while the theme is relevant, it is only one part of a larger structural demand story.

The management said, “…Of course, as I was mentioning about the India market growth story on the power transmission side, data centers are one of the important factors that will bring in more demand, therefore, more load to the grid, and therefore there has to be more generation and more transmission.”

However, the management clarified that the demand drivers are much broader, adding, “So data center is just one of the aspects which is going to be an important factor.”

Expanding on the bigger picture, the management noted, “But in the current scheme of things, I think the urbanization and the use of air conditioning and other equipment is something that is anyways driving the growth, apart from the use of expected increase in the EV space.”

Stock Down 40 percent: Market Caution, Not Business Weakness

Addressing the sharp correction in the stock price despite strong operational performance, the management attributed the decline largely to broader market trends and the company’s relatively recent listing.

The management said, “…So, clearly, we are not the only ones. The entire broader market, when we see, especially for small-caps, which we are one of them, has fallen drastically.” The management further pointed out that this trend is industry-wide, stating, “Now, when you also look at the peers, we all have fallen 40 percent to 50 percent.”

Explaining what the market may be missing, the management added, “What probably the market is not recognizing in us is the fact that we are new. Just December… so when we meet various analysts and fund houses and others, obviously the initial reaction has been, ‘Okay, we want to see your performance for at least two-three quarters and then start taking positions.’”

Highlighting the company’s recent execution track record, the management said, “So I think now we are at a stage where we are about to sort of, you know, deliver almost better than expected results for the last five quarters straight, and the momentum should now build on.”

The management also emphasized relative performance versus other listings that happened during the same time, noting, “…probably the only stock who has sustained or is still slightly better than its IPO valuation in the kind of lot where we were , you know, at the time when we were getting launched, you would remember there were so many companies.” Concluding on investor strategy, the management added, “So we have–and that’s the intent. Our intention is also to have some marquee long-term investors in our portfolio.”

Growth Set To Outpace Industry

On growth outlook and profitability, the management indicated confidence in sustaining industry-leading expansion, supported by a strong order pipeline and execution momentum.

The management said, “Okay, so we have given guidance for the year, in fact when we started it was 25 percent. But now the way we have closed the three quarters, we have in fact increased our guidance.”

Providing the updated outlook, the management added, “It could be in the range of 27 percent or so for the whole year. Last year, it was 30 percent. So with this increased base, also, the 27 percent is fundamentally quite good.”

The management also compared this growth with the broader industry, noting, “The industry is also growing, but probably they are growing in the range of maybe 10 percent or so.”

On FY27 visibility, the management maintained a cautiously optimistic stance, stating, “FY27– I think it’s early to comment, but I think it would be in the range of upwards of 20 percent for sure.”

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