Accumlate Voltamp Transformers Ltd For Target Rs.11,003 by Prabhudas Liladhar Capital Ltd
Healthy Q1, Solid execution outweighs margin pressure
Voltamp Transformers (VAMP) reported a strong 1QFY27 performance, with revenue increasing 28.4% YoY. EBITDA margin, however, contracted by 238bps YoY, likely reflecting the continuing impact of higher input costs and supply chain disruptions amid Middle East conflict. YTD order inflow remained healthy, supported by robust demand across industrials, utilities, renewables and data centres, further strengthening the order book and providing healthy execution visibility. Execution of the legacy fixedprice order book (~Rs3bn) may be largely completed over the next 1–2 quarters Management remains confident of delivering healthy volume growth in FY27, backed by a strong enquiry pipeline across key end-user industries. While commissioning of the new 6,000 MVA EHV transformer facility has been deferred to Oct'26 due to delays in equipment deliveries, VAMP has announced an additional INR900mn capex to set up a 2,300 MVA dry-type transformer facility, expected to be commissioned by end-FY28, expanding its addressable market. Supply constraints in CRGO steel and select critical components, along with geopolitical uncertainties, remain near-term key factor to watch. We retain our ‘Accumulate’ rating, valuing the stock at a P/E of 27x Mar’28E (26x Mar’28E earlier) factoring in strong order inflow and capacity addition supporting long term growth with a revised TP of Rs11,003 (Rs10,503 earlier).
Long term view:
Near-term challenges persist due to supply-chain disruptions, elevated raw-material prices and rupee depreciation; however, we remain positive on VAMP considering its
1) strong market position in industrial transformers
2) healthy demand momentum
3) debt-free balance sheet,
4) consistent free cash flow generation
5) incremental capacity additions enabling sustained execution. The stock is trading at a P/E of 28.9x/24.4x FY27/28E.
Executions drives profitability despite elevated input cost:
Revenue increased by 28.4% YoY to Rs5.4bn (PLe: Rs4.7bn). Gross margin contracted by 299bps YoY to 24.6% impacted by higher input cost. EBITDA increased by 10.5% YoY to Rs803mn (PLe: Rs647mn) with EBITDA margin contracting by 238bps YoY to 14.8% primarily due to lower gross margin. PBT (exc. Extra-ordinaries) increased by 12.7% YoY to Rs1.2bn (PLe: Rs898mn) likely aided by higher other income (+16.6% YoY to Rs416mn). Adj. PAT increased by 14.7% YoY to Rs912mn (PLe: Rs678mn) supported by lower effective tax rate (-136bps YoY to 22.6%).
Other important points:
* The commissioning of the new EHV transformer facility (6,000 MVA) was delayed by around two months due to late delivery of select imported equipment; commercial operations as expected to begin from October 2026.
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SEBI Registration number is INH000000933
