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Healthy execution despite margin drag

Voltamp Transformers (VAMP) reported a healthy 2QFY27 performance, with revenue increasing 41.8% YoY, supported by execution of 4,733 MVA during the quarter. EBITDA margin, however, contracted by 393bps YoY, likely reflecting the continuing impact of higher input costs and supply chain disruptions. Order inflows increased 27% YoY to ~INR8bn, supported by demand across cement, steel, O&G, data centres and other segments. The order book stood at ~INR19bn, providing healthy execution visibility, with legacy orders accounting for ~INR1.5bn and expected to be largely executed in Q3FY27. The company continues to prioritise executable orders and shorter delivery cycles, with new orders being booked at prevailing prices. Meanwhile, its new manufacturing facility at Jarod commenced operations in Oct'26, with an initial focus on 220kV transformers, followed by plans to enter the 400kV transformer segment over the next few years. The facility's contribution is likely to ramp up in FY28 as operations scale up, supporting volume growth over the medium term. Demand across industrial segments remains broadly stable, with data centres witnessing healthy traction as the company continues to receive, manufacture and deliver orders for the segment, alongside steady collections. Going forward, geopolitical uncertainties, elevated commodity and logistics costs remain key factors to watch. The stock is currently trading at a P/E of 24.6x/20.8x on FY28E/29E earnings. We maintain our ‘Buy’ rating, valuing the stock at a P/E of 26x Sep’28E (same as earlier), arriving at a TP of INR11,858 (INR11,524 earlier).

Long term view: Amid near-term challenges, we remain positive on VAMP considering its

1) strong market position in industrial transformers

2) healthy demand momentum across segments

3) debt-free balance sheet

4) consistent free cash flow generation

5) incremental capacity additions enabling sustained execution and volume growth.

Strong execution despite cost pressures impacting margins: Revenue increased by 41.8% YoY to INR6.8bn (PLe: INR6.2bn). Gross margin contracted by 543bps YoY to 23.9% impacted by higher input cost. EBITDA increased by 13.1% YoY to INR1.1bn (PLe: INR930mn) with EBITDA margin contracting by 393bps YoY to 15.5% primarily due to lower gross margin. PBT (exc. Extra-ordinaries) increased by 5.1% YoY to INR1.1bn (PLe: INR1.1bn) despite lower other income (INR79mn vs. INR148mn in Q2FY26). Adj. PAT increased by 7.9% YoY to INR851mn (PLe: INR839mn) supported by lower effective tax rate of 22.3% (vs. 24.3% in Q2FY26)

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