Buy Voltamp Transformers; target of Rs 1374: Arihant Capital

Arihant Capital's research report on Voltamp Transformers

Voltamp Transformers has reported weak performance during Q3FY21 with revenue de-growth of 30% YoY largely due to delay in delivery acceptance and disrupted supply chain amidst covid pandemic. Gross margin of the company decreased by 238 bps YoY due to sharp rise in raw material prices. EBITDA margin for the quarter contracted by 272 bps YoY owing to gross margin contraction. PBT of the company was flat YoY to INR 406 mn on the back of higher other income (+110% YoY/+69% QoQ). Due to weak operating performance, profit of the company de-grew by 8.5% YoY to INR 321 mn. Company’s current order book of INR 5,292 mn provides a future revenue visibility.

Outlook

We maintain our Buy rating on the stock with a revised TP of INR 1,374.

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