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

Business prospects are looking robust with a healthy order pipeline.

<div class="paragraphs"><p>Transformers seen at a power sub-station. (Source:</p></div>
Transformers seen at a power sub-station. (Source:

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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 value/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.

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Yes Securities Voltamp Transformers Plant Visit July 2023.pdf
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