During no load condition of transformer, the excitation or magnetizing current flow in the primary winding of the transformer. This excitation current is made up of large component of magnetizing component of current (Im) which is in quadrature with the applied voltage and comparatively small in phase component of current (Ie) which is in phase with the applied voltage. Thus due to large magnetizing component, power factor of the transformer will be very low. Power factor will be usually 0.1 to 0.2 lag.