Buy Voltamp Transformers; target of Rs 10,318: Prabhudas Lilladher

Prabhudas Lilladher's research report on Voltamp Transformers

Voltamp Transformers (VAMP) reported a strong quarterly performance with revenue rising 21.3% YoY, while EBITDA margin remained largely stable YoY at 19.4%. Domestic demand environment continued to remain robust, supported by strong private and public capex, with healthy traction from sectors such as steel, auto & auto ancillary, data centers, chemicals, oil refineries, and state utilities like GETCO. VAMP showcased strong execution capabilities by manufacturing and delivering its highest-rated 160MVA/220kV transformer ahead of schedule. The ongoing 6,000 MVA capacity expansion is progressing as planned and is expected to be fully operational by Q1FY27, catering to growing demand from utilities, renewables, and data centers. However, rising private-sector capacity additions and intensify competition could exert pricing pressure leading to likely margin normalization. Additionally, supply chain constraints in CRGO steel and a few other critical components along with geopolitical uncertainties remain key risk factors for execution going forward.

Outlook

The stock is trading at a P/E of 20.9x/18.7x FY27/28E. We roll forward to Sep’27E and maintain ‘Buy’ rating valuing the stock at a PE of 26x Sep’27E (28x Mar’27E earlier) with a TP of Rs10,318 (Rs10,285 earlier).