Transformer oil is often viewed as a niche industrial product, but its demand is directly linked to the expansion of electricity infrastructure. Each power transformer installed across transmission lines, renewable energy, industrial facilities, data centres, and railways requires insulating oil for cooling and electrical insulation.
How India’s ₹9 Lakh Crore Grid Expansion Generates Multi-Year Industrial Fluid Demand
As countries accelerate investments in power infrastructure, transformer oil is emerging as a structural beneficiary of the energy transition. India’s power sector is currently witnessing one of its largest investment cycles, estimated at ₹9 lakh crore by 2032.
The country added 55.3 gigawatts (GW) of renewable energy capacity in FY26 alone, taking total non-fossil fuel capacity to 283.5 GW. To support rising power generation, India’s transmission network is planned to expand from nearly 5 lakh circuit kilometres to 6.5 lakh circuit kilometres by 2032.
Over the same period, transformation capacity is expected to increase from 1,429 GVA to 2,354 GVA, creating sustained demand for new transformers and, consequently, transformer oils. Beyond the power sector, emerging demand centres are adding another layer of growth. India’s data centre capacity is also expanding fast.
Collectively, these structural trends are expected to increase transformer installations and grid capacity. This in turn provides a demand tailwind for transformer oils over the long term. Against this backdrop, this article examines one of India’s two leading players in the transformer oil market.
#1 Savita Oil: Building the Next Phase of Growth Through Premium Transformer Oils
Savita Oil is an Indian manufacturer of specialty petroleum products. The company’s product portfolio is heavily led by petroleum specialty oils, with a significant presence in transformer oils, white and mineral oils, specialty fluids, and automotive and industrial lubricants. Petroleum Specialty Oils accounts for 73% of revenue.
Product Matrix: Navigating Savita’s Mineral and Bio-Based Specialty Portfolio
Savita Oil is one of the few companies globally to manufacture a complete portfolio of mineral-, natural-, and synthetic-ester-based transformer oils. The company sells the transformer oils under the ‘TRANSOL’ brand. It also offers eco-friendly products, such as bioTRANSOL HF and TRANSOL Synth, for the power and distribution sectors.
Beyond the power sector, the demand for its existing transformer products is being further boosted by new sectors, including battery energy storage systems, railway, electric vehicles, and floating solar projects.
Savita caters to a wide range of end users, including transformer OEMs, transformer owners and operators, maintenance contractors, and electricity utilities. The transformer oil business has a distinct margin hierarchy by product type. Power transformer oils command high margins. In contrast, distribution transformer oils offer the lowest margin.
Risk Mitigation: De-Risking Revenue via Low Customer Concentration
The company serves a diversified customer base, including BHEL, Crompton, Hitachi, ABB, NTPC, Powergrid, and Toshiba. No customer accounts for more than 5% of total revenue, reflecting low client concentration risk and a well-balanced revenue profile.
The company’s management is striving for an overall blended volume growth target of 12-15% annually across its businesses. In line with this, the transformer oil segment itself is specifically expected to grow at a robust rate of 12% to 15%.
Operational Headroom: Asset Utilization and Swing Capacity Leverage
Savita Oil is well-positioned to handle its projected growth without the immediate need for heavy capital expenditure. The transformer oil capacity is operating at 65-70% utilization. This leaves sufficient headroom to accommodate expected demand for the next three to four years without requiring major facility expansion.
The company utilizes its Silvassa and Turbhe facilities as swing capacities for producing domestic transformers and white oils. Together, these facilities have a combined installed capacity of 5.5 lakh tonnes operating on a two-shift basis.
Value Over Volume: The Economics of High-Margin Ester Oils
A significant technological shift for Savita Oil is its push towards higher-margin natural and synthetic ester oils. The company maintains a natural ester capacity of 5,000 kilo litre (KL) at its Mahad facility. These ester-based oils command a significant premium upfront.
For instance, natural ester oil costs 2x as much as mineral oil, and synthetic ester oil costs 5x as much as mineral oil. But they reduce the buyer’s lifetime cost-of-ownership benefits due to superior fire safety, durability, and biodegradability. Strong demand for its products has translated into a robust financial performance.
Financial Diagnostics: Dissecting FY26 Margin Recovery and Profit Surge
The company’s revenue rose by 14.4% year-on-year to ₹4,362.6 crore. On the operational front, Savita Oil saw a substantial recovery. The EBITDA for FY26 stood at ₹290.6 crore, a notable increase from ₹207.8 Crore reported in FY25. Margins bounced back to 6.6% from 5.4% in FY25. Net profit surged by 60.6% to ₹181.8 crore.
#2 Apar Industries: Global Scale with Leadership in High-Voltage Transformer Oils
With over 57 years of expertise in the speciality oils segment, Apar Industries is India’s largest and third-largest global manufacturer of transformer oils. It markets transformer oils under the POWEROIL brand, offering more than 20 grades that meet international standards.
Market Leadership: Scaled Distribution Across Traditional and Biodegradable Grades
These products are approved by major utilities, OEMs, and power transmission companies, with a strong domestic market presence supported by strategic certifications and utility approvals. The portfolio spans traditional and advanced biodegradable fluids. Traditional, highly refined oils (POWEROIL Mineral Insulating Oils) are used extensively across various voltage classes.
Like Savita Oil, the company offers POWEROIL NE, a K2-class natural-ester transformer fluid derived from renewable, plant-based sources. The product is over 90% biodegradable and caters to the growing demand for environmentally sustainable insulating oils. This product serves floating solar, wind, and marine transformers, as well as locations like forests.
Strategic Cross-Selling: Maximizing Core Transformer Component Share
Apar is the sole supplier of HVDC transformer oil to major global players such as Hitachi Energy, GE, and Siemens. To maximize value for its clients, Apar uses a strategic cross-selling model. The company leverages its presence in transformer oils and Continuously Transposed Conductors (CTCs) to offer integrated solutions to transformer manufacturers.
Together, these products constitute nearly 60% of a transformer’s core components. Apar holds a prominent presence in the 765 kV AC transformer oil segment. It is also the only Indian company to supply transformer oil to all major 800 kV HVDC projects in India.
Geopolitics of Growth: Escalating the Middle East Manufacturing Footprint
APAR focuses on international expansion, with over 49% of its transformer oil sold overseas. The company supplies major international entities, such as the Saudi Electricity Company. It is actively scaling up a manufacturing plant in Saudi Arabia to meet local demand.
Volume Disconnect: Analyzing Domestic Growth vs Global Tailwinds
In FY26, the domestic transformer oil business posted 12.2% volume growth over the 12-month period, while global volumes grew by 3.5%. The Transformer & Specialty Oil division generated ₹5,086 crore in revenue in FY26. Apar estimates the transformer oil market to grow in tandem with growth in the T&D sector.
To capitalize on these growth opportunities, Apar is expanding its capacity and geographic expansion. The company has earmarked ₹1,500 crore for FY27, of which approximately ₹200 crore is allocated specifically to the Oil division.
Here’s a side-by-side comparison of the two companies:
| Particulars | Savita Oil | Apar Industries |
| Market Position | One of India’s two leading transformer oil manufacturers | India’s largest and the world’s third-largest transformer oil manufacturer |
| Brand | TRANSOL | POWEROIL |
| Key Differentiator | Higher-margin ester oils | Sole supplier of HVDC transformer oil to major global OEMs |
| Growth Guidance | 12-15% transformer oil volume growth | Growth in line with T&D sector expansion |
| FY26 Revenue | ₹4,363 crore | ₹5,086 Cr (Transformer & Specialty Oils) |
Apar leads in scale with ₹5,086 crore in FY26 revenue and a major global footprint as a supplier for HVDC projects, while Savita Oil reported ₹4,363 crore in revenue and differentiates itself through a portfolio of high-margin ester-based products.
Furthermore, while Savita targets 12-15% volume growth, Apar’s growth strategy remains aligned with the broader expansion of the T&D sector.
Fundamental Valuation: The Quality Premium Trade-Off
Apar Industries has stronger Return on Capital Employed (ROCE) and Return on Equity (ROE) than Savita Oil. In terms of valuation, both companies are trading at a premium to their 5-year historical and industry median.
| Peer Comparison (X) | |||||
| Company | Price-to-Earnings | Return Ratios | |||
| Company | 5Yr Median | Industry Median | ROCE (%) | ROE (%) | |
| Savita Oil | 17.9 | 13.6 | 13.3 | 15.7 | 11.0 |
| Apar Industries | 63.0 | 27.6 | 31.1 | 31.1 | 20.2 |
Transformer oil may not be the most visible segment of the power value chain, but it remains an indispensable component.
As investments in renewable, transmission infrastructure, data centres, and grid modernisation continue to accelerate, demand for transformer oils is expected to remain structurally strong. This is expected to benefit industry-leading players, such as Savita and Apar. Meanwhile, keep them in your watchlist.
Disclaimer
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data were unavailable have we used an alternative, widely accepted, and widely used 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.
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