Emkay Global Financial Services has maintained hold rating on Voltamp Transformers with a target price of Rs 656 in its June 2, 2011 research report.
"Voltamp Transformers, Q411 PAT of Rs 190 million, in line despite lower revenues, due to better margins on execution of high margin orders. Volumes disappoint, realization improves on higher raw material costs. FY11 margins at 12.7% - do not see significant downside from here and expect FY12E margins at 12% - earnings growth from now on to be driven by volume growth. Expect strong volume growth H2FY12E onwards (Q4 inflows at Rs 2 billion, up 17% yoy) and 15% volume growth in FY12E (low base, pent up demand and power capacity additions). Cut FY12E EPS by 9% (lower volume); trading at 4.4xFY13E EV/EBITDA in line with industry; Triggers -yoy volume growth & no margin fall."
"At CMP of Rs 575, the stock is trading at 8.3xFY13E earnings, 1.3xFY13E Book value and 4.4xFY13E EBITDA. On EV/EBITDA basis, the stock is trading in line with peer average. Potential triggers for the stock would be (1) yoy volume growth (after two consecutive qtrs of -ve yoy growth), (2) likely better ordering and inflows in H2FY12E, and (3) continuing stability in margins. Maintain Hold with a positive bias and price target of Rs 656/share (5.2x13E EBITDA, 15% premium to peers)," says Emkay Global Financial Services research report.
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