Accumulate Voltamp Trans; target of Rs 989: Asit C. Mehta

3684 Investors following Voltamp Trans. Share this News with them.

0

Like this story, share it with millions of investors on M3

Accumulate Voltamp Trans; target of Rs 989: Asit C. Mehta

Asit C. Mehta is bullish on Voltamp Transformers and has recommended accumulate rating on the stock with a target of Rs 989 in its November 01, 2010 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

ALSO READ See previous views by Asit C. Mehta See what other Experts & Brokerages are saying about Voltamp Trans See messages about Voltamp Trans Voltamp Trans BSE | NSE 30/05/12 Are Mutual Funds betting on Voltamp Trans?

Asit C. Mehta is bullish on Voltamp Transformers and has recommended accumulate rating on the stock with a target of Rs 106 in its November 01, 2010 research report.

"Voltamp Transformers Ltd (VTL) net sales increased 11.8% YoY to Rs 1243.4 million on the back of volume growth. Operating profit margins decreased by 780 bps to 10.1% on account of pricing pressure. Net profit decreased by 45.7% to Rs 93.2 million. Current order book stands at Rs 4380 million (7,617 MVA). VTL's net sales grew 11.8%, from Rs 1111.8 million in Q2 FY10 to Rs 1243.4 million in Q2 FY11, on account of increase in volumes. Transformer sales in terms of MVA increased to 2363 MVA in the current quarter vs 2097 MVA in Q2 FY10. Aggressive bidding for new orders and intense competition in the industry impacted VTL's operating margin. Margins declined sharply to 10.1% in Q2 FY11 vs 17.9% in Q2FY10. Operating margins are expected to remain subdued for FY11, on account of pricing pressure. Depreciation increased to Rs 16.4 million in Q2 FY11 vs Rs 10.5 million in Q2 FY10, as Vadadla facility commissioned during the second half of FY10. Net profit margins decline to 7.5% in Q2 FY11 vs 15.4% in Q2 FY10 primarily on account of fall in operating margins."

"New investment announcements pushed up the outstanding investment in the industry to a new high of Rs 118 trillion at the end of September 2010. 765 new projects entailing investment of Rs 3.14 trillion were announced in the September 2010 quarter. New projects are getting announced in spite of the huge capacity additions happened in the last two years and much more scheduled in the next two years. Two third of the projects announced in the September 2010 quarter belong to the private sector. The continuous flow of fresh investment announcements reflects the confidence of Indian corporate in the sustainability of the growth in demand. Considering strong investments made across the industries, we believe current pricing pressure in the transformer industry to ease over time. Hence for FY12E, we expect operating profits margins to increase from the current levels to 16%."

"As significant portion of balance sheet constitutes of investments, we have valued core (transformer) business separately and then added investments per share. We have assigned a P/E of 10x to Voltamp's core (transformers) business earnings of Rs 70.2 (FY12E) to arrive at value per share of Rs 702. Considering investments per share of Rs 287 and core business value of Rs 702 / share, we recommend "Accumulate" on Voltamp Transformer Limited with a price target of Rs 989," says Asit C. Mehta research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment