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Drivers in place for strong long-term growth

We recently interacted with Voltamp Transformers’ (VAMP) management, which remains positive on the structural growth outlook for India’s transformer industry, supported by grid expansion, renewables, industrial capex and data centers. VAMP started FY27 on a strong footing, with Q1 order inflow of ~INR11.5bn (~7,775MVA) and capacity utilization at 80–90%. Order momentum was led by corporate/private-sector customers, with data centers contributing to ~31% of inflow and healthy traction across utilities, renewables and industrials. While domestic demand remains robust, VAMP continues to follow a disciplined approach to order booking, prioritizing margins and execution. Orders booked post-Mar’26 carry better margins, with current-pricebased bookings and pass-through mechanisms providing protection against commodity price volatility. Capacity expansion remains a key growth lever, with ~3,000MVA incremental annual capacity expected to be absorbed over the next 1–2 years, while the 6,000MVA facility can scale to 10,000–12,000MVA based on demand. Data center demand remains strong , with customers seeking delivery timelines of ~8 months, while utility, renewable and industrial demand provides diversification. The management sees >90% capacity utilization over the next 5 years, supported by data center expansion and the green-energy transition. While supply constraints in specialized components remain a near-term monitorable, proactive procurement and vendor relationships are helping mitigate risks. Overall, strong demand visibility, disciplined order selection, improving order economics and capacity expansion position VAMP to benefit from the structural transformer upcycle.

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 P/E of 28.9x/24.4x FY27/28E. We maintain our ‘Accumulate’ rating on the stock, valuing the stock at P/E of 27x Mar’28E (same as earlier) with a TP of INR 11,003 (same as earlier)

Key takeaways

Order inflow and order book:

Q1 order intake was largely driven by corporate/privatesector customers, with no single customer accounting for a disproportionate share. Enquiry traction remained broad-based across utilities, industrials, renewables and data centers, with data centers contributing to ~31% of inflow. Order inflow momentum is expected to remain healthy as customers evaluate the company’s expanded manufacturing capabilities. The company remains selective on orders, prioritizing margin and delivery timelines over capacity utilization; orders that did not meet these filters were rejected in Q1.

Capacity expansion:

A new dry-type transformer facility is under planning at a separate location to increase capacity, improve logistics and manufacturing flexibility, and reduce single-site concentration risk. The facility will be set up in 12-14 months post securing required permits and will scale up progressively following testing, certifications, statutory approvals and customer qualifications. The incremental capacity is expected to be absorbed over the next 1–2 years across utilities, industrials, renewables and data centers, while the existing plant will gradually focus on HV and distribution transformers as dry-type operations transition to the new site. The new 6,000MVA EHV facility, expected to be commissioned by Oct’26, has provisions to expand to 10,000MVA and potentially 12,000MVA, with further investment contingent on demand.

Capacity utilization:

Overall capacity utilization has remained at ~80% for the past 25 quarters, excluding the pandemic period, while manufacturing utilization has been 100%+ over the past 2 years. Elevated utilization levels support the need for incremental capacity, which is expected to be absorbed relatively quickly given demand visibility. Capacity additions are being calibrated to executable customer demand rather than speculative requirements, with >90% utilization visibility over the next 5 years if data center expansion and the green-energy transition continue.

Data centers:

Data center demand remains strong across major customers, including NTT, CtrlS and other domestic and international operators. Some customers are seeking transformer deliveries within ~8 months, making the availability of critical components such as bushings a key constraint. The company remains selective on orders, assessing project readiness—including land, power connectivity and approvals—before committing capacity. Rising power density and larger project sizes are expected to drive demand for higher capacity transformers

Utilities & renewable energy:

The company is participating selectively across voltage classes, rather than pursuing every tender, while avoiding excessive concentration in any single utility/customer. Utility demand is expected to remain an important driver of incremental capacity absorption. Renewable projects continue to drive transformer demand, supported by grid expansion and renewable integration. Opportunities span solar, grid integration and associated transmission infrastructure, with the expanded capacity positioned to capture the next phase of renewable-led grid investments.

Industrial:

Demand remains strong across cement, metals, industrial manufacturing and other large privatesector capex projects. The company has secured orders from several industrial customers and continues to see a healthy enquiry pipeline, with industrial capex expected to remain an important demand driver alongside utilities and data centers

Supply chain constraints:

Supply chain constraints persist for specialized components, particularly bushings and certain machine/component categories, with elevated lead times. The company is mitigating these through advance procurement, monthly planning and long-term vendor relationships, while component availability remains a key filter for incremental orders. Inventory is being built for the next 1–2 years for long-lead components, although customization limits the extent of stocking.

Margins:

Customer negotiations for pass-through have been undertaken to support margins. New orders are being booked at current component prices based on back-to-back supplier quotations, reducing the risk of legacy low-margin orders weighing on future profitability.

Chinese competition:

The company sees sufficient market opportunity for multiple players, given the presence of established domestic and international competitors across transformer segments. Greater Chinese participation could increase competitive pressure over time, but local manufacturing, established customer and vendor relationships, product quality and execution track record are expected to remain key competitive advantages.

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