Voltamp Transformers - Near-Term Outlook Stays Positive: Yes Securities

Yes Securities Report

In a highly competitive industry, Voltamp Transformers Ltd. has credibly maintained its 15% market share in industrial application transformers. It has a marquee customer base largely comprised of private corporates and profitable public sector undertakings; it refrains from dealing with State Electricity Boards owing to the elongated payment cycle.

This strategy has helped the company preserve its balance sheet strength even in times of distress where quite a few players went bust. Because of its superior product quality, prompt after-sales service and stellar record of no product recalls, Voltamp is a preferred vendor for its customers and enjoys longstanding relationships.

As of FY23, its top clients included Gujarat Energy Transmission Corporation Ltd., Larsen and Toubro Ltd., Indian Oil Corporation Ltd., Tata Steel Ltd., Engineers India Ltd., Vedanta Ltd., Siemens Ltd., etc.

Top 10 clients accounted for 27% of revenue versus 22% in FY22.

Management follows a very prudent strategy of not achieving topline growth at the cost of balance sheet health; Voltamp has remained debt free for the last 22 plus years.

As of FY23, cash and investments stood at ~Rs 7.1 billion while net working capital improved to 81 days (from 97 days in FY22).

At current market price, the stock trades at a price/equity of 16.8 times/13.3 times and enterprise /Ebitda of 14.8 times/11.7 times for FY24E/FY25E and excluding other income it trades at a price/earning of 16.4 times/12.2 times FY24E/FY25E.

We maintain our 'Buy' rating on the stock with an unchanged target price of Rs 4,779 valuing it at 16 times FY25E earnings per share.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.