Accumulate Voltamp Transformers; target of Rs 14,922: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Voltamp Transformers with a target price of Rs 14,922 in its research report dated August 13, 2024.

Broker Research

August 19, 2024 / 13:29 IST

Accumulate

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Voltamp Transformers

We recently interacted with Voltamp Transformers’ (VAMP) management team, wherein they highlighted their strategies to capture the growing opportunities in India’s transformer industry. Domestic demand outlook over the next 5 years is robust, with traction across market segments, particularly in data centers and green energy projects. Oil & gas capex will also pick up in 2 years and see momentum for a long period. Current demand upcycle is well diversified across ~30 sectors, with industrial capacity expansions being funded in a disciplined manner, largely from internal accruals of corporates. On the other hand, pricing pressure is expected to pick up as the overall industry capacity increases, while shortage of cold-rolled grain-oriented (CRGO) steel poses a key risk to execution. VAMP is expanding its capacity by 6,000 MVA (with scope for additional 10,000 MVA) to cater to the growing demand, while maintaining its stringent focus on balance sheet quality and cash flow visibility. The company also aims to increase revenue from its margin-accretive services business to Rs1bn in the next 2 years. We remain positive on VAMP considering its 1) strong market position in industrial transformers, 2) healthy demand momentum, 3) robust balance sheet, 4) consistent free cash flow generation, and 5) growing high-margin services business.

Outlook

The stock is currently trading at a P/E of 41.6x/35.3x FY25/26E. We maintain ‘Accumulate’ rating with an unchanged TP of Rs14,922, valuing the stock at a P/E of 40x FY26E (same as earlier).

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