Add Voltamp Transformers ltd For Target Rs. 10,800 By Emkay Global Financial Services Ltd
We downgrade Voltamp Transformers to ADD from Buy, while raising Mar-27E TP by 8% to Rs10,800 from Rs10,000. The downgrade reflects the sharp runup in the stock price over recent months which has compressed the potential upside from current levels. In Q4FY26, the company reported pressure on margins, primarily driven by higher raw material costs. This was largely attributable to rupee depreciation and the ongoing Middle East conflict, which significantly increased the cost of key inputs such as transformer oil. We expect things to normalize gradually. On the growth front, the company’s 6,000MVA capacity expansion remains on track and is expected to be commissioned by Jul-26. Voltamp ended FY26 with an order book of Rs12bn, up 28% YoY, while the management highlighted a strong enquiry pipeline, providing confidence on swift utilization of the incremental capacity.
Q4FY26 results impacted by higher input cost
Revenue was flat YoY at Rs6.2bn, impacted by supply-chain disruptions. Adj EBITDA margin declined by 466bps YoY to 14%, driven by a 384bps contraction in gross margin along with higher other expenses, primarily due to elevated raw material costs due to rupee depreciation and the ME conflict. Absolute EBITDA declined 21% YoY to Rs917mn. Other income turned negative at Rs101mn due to MTM losses. The effective tax rate increased to 28.6% in Q4FY26 versus 25% in Q4FY25. Consequently, reported PAT declined 51% YoY (adjusted PAT down 27% YoY).
Capacity addition on track
Given the strong demand and order inflow, VAMP has been operating at its total current capacity of 14,000MVA. It is investing Rs2bn (funded via internal accruals) for adding 6,000MVA capacity in Vadodara (for an up to 220kV range) which will lift its total installed capacity to 20,000MVA. The plant is scheduled to come onstream by Jul-26 and will ramp up capacity utilization to 50-60% by FY27E, picking up pace thereafter. The Board of Directors of the company has approved investment of Rs250mn for the acquisition of a new plot of land near Vadodara, to keep the land bank ready for future use.
View and Valuations
We remain positive on Voltamp Transformers, supported by its consistent execution track record and operational discipline. The company ended FY26 with an order book of Rs12bn, up 28% YoY, while it highlighted a strong enquiry pipeline, providing confidence on swift utilization of the incremental capacity. Expanding opportunities across renewables, EV charging infrastructure, green hydrogen, and data centers further broaden Voltamp’s addressable market and support its long-term growth outlook. The stock currently trades at ~27x/23x FY27E/28E 1YF PER, offering limited upside from current levels. Hence, we downgrade the stock to ADD from Buy while nudging up Mar27E TP to Rs10,800 (25x FY28E).
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