Accumulate Voltamp Transformers; target of Rs 1301: Arihant Capital

Arihant Capital 's research report on Voltamp Transformers

Voltamp Transformers reported mix performance during Q1FY21. It has reported 61% YoY fall in revenue at Rs 723 mn, primarily due to weak order execution and Covid impact. Lower operating performance of the Company was offset by sharp jump in other income, resulting into profit growth of 14% YoY/67% QoQ to Rs 193 mn. Other income for the quarter increased by 235% YoY to Rs 224 mn, on account of increase in investment value. EBITDA for the quarter de-grew by 86% YoY to Rs 29 mn while EBITDA margin decreased to 4% vs. 11% YoY, due to lower revenue growth.

Outlook

However, Gross margin of the Company increased by 282 bps YoY to 26%. Raw material cost as a percentage of sales stood at 74% vs. 77% YoY. We change our rating to Accumulate from Buy with a revised target price of Rs 1,301 (earlier Rs 1,244).