Buy Voltamp Transformers; target of Rs 1244: Prabhudas Lilladher

Prabhudas Lilladher's research report on Voltamp Transformers

Voltamp Transformers reported healthy set of numbers however lower Other income (MTM loss) dragged profitability. Based on our estimates, order inflow stood at ~Rs2.5bn (up ~33.5% YoY) as on 4QFY20, translating order backlog to Rs4.7bn (executable over next two-three quarters). We expect Voltamp to report muted volume CAGR over next two years (FY20-22E) owing to weak economic environment. The management would be bidding cautiously for orders and believes that several industries like Infrastructure, Steel, Cement, Oil & Gas, Renewables (especially Solar) and Chemicals etc. to have huge opportunities in medium to long-term.

Outlook

The stock is currently trading at attractive valuations of 12.9/10.4x FY21E/22E. We maintain BUY rating on the stock with TP of Rs1244.