Emaky is bullish about Voltamp Transformers & sees 38% upside in it
Posted: Tue May 06, 2025 8:09 pm
Strong player in distribution space; retain with lower TP
We maintain BUY on Voltamp Transformers (VAMP) while cutting our TP by ~15% to Rs11,350 (upside: 39%) from Rs13,350 earlier. VAMP’s Q4FY25 results were ahead of estimates due to higher than estimated volume and realization. The higher volume (+9.4% YoY) included a spillover from last year. Revenue/EBITDA/PAT was up 24/16/4% YoY at Rs6.2bn/1.2bn/968mn. EBITDA margin declined by 135bps YoY to 18.6% as gross margin fell by 300bps/230bps YoY/QoQ to 27%. PAT growth was impacted by lower other income and higher tax rate. The management indicated a healthy and sustaining enquiry pipeline across end-markets, especially renewable projects, aided by steady growth in domestic demand. The announced capacity addition plan of 6,000MVA is on track. The BoD declared dividend of Rs100/share. We believe VAMP would be a key beneficiary of India’s renewable capacity addition, private capex revival, and GoI’s PLI initiatives in the manufacturing space. VAMP’s current strong order-book (Rs9.8bn, +26% YoY), coupled with the enquiry base, robust balance sheet, and improved cyclical demand tailwinds, grants us a more constructive outlook on the stock.
Q4FY25 results ahead of estimates
Q4FY25 performance was ahead of estimates led by higher-than-expected volume and realization. Revenue/EBITDA/PAT was up 24/16/4% YoY at Rs6.2bn/1.2bn/968mn. EBITDA margin declined by 135bps YoY to 18.6% as gross margin fell by 300bps/230bps YoY/QoQ to 27%. PAT was impacted by the lower other income (-27% YoY due to MTM losses) and higher tax rate at 25% as against 21.7% in Q4FY24 (FY25: 25%).
Volume growth and realization spring a surprise
Volume during Q4FY25 stood at 4,490MVA (+9.4%YoY), ahead of our estimates; this is likely due to a spillover from last year. Implied utilization stood at 128% (FY25: 110%). We expect normalization from next year. For FY25, volume increased 18% YoY at 15,460MVA. Q4 implied realization per MVA came in at a new high, of Rs1.3mn (+14% YoY). This could be on the back of the favorable mix. For FY25, realization stood at Rs1.2mn per MVA, +2% YoY.
We maintain BUY; revise down TP
We cut FY26/27E earnings by ~3% each, mainly on account of reduction in margin by ~30/50bps and lower other income, while we raise realization by 3%. We introduce FY28 estimates with revenue/EBITDA/PAT growth of 9%/10%/11%. The stock is currently trading at ~27x/22x/20x its FY26E/FY27E/28E 1YF PER. We maintain BUY, while revising down our TP by ~15% to Rs11,350 @30x 1YF FY27E earnings. Sustained positive momentum at the sectoral level provides a strong case for us remaining positive on VAMP maintaining its robust balance sheet, customer stickiness, and upcoming capacity expansion
We maintain BUY on Voltamp Transformers (VAMP) while cutting our TP by ~15% to Rs11,350 (upside: 39%) from Rs13,350 earlier. VAMP’s Q4FY25 results were ahead of estimates due to higher than estimated volume and realization. The higher volume (+9.4% YoY) included a spillover from last year. Revenue/EBITDA/PAT was up 24/16/4% YoY at Rs6.2bn/1.2bn/968mn. EBITDA margin declined by 135bps YoY to 18.6% as gross margin fell by 300bps/230bps YoY/QoQ to 27%. PAT growth was impacted by lower other income and higher tax rate. The management indicated a healthy and sustaining enquiry pipeline across end-markets, especially renewable projects, aided by steady growth in domestic demand. The announced capacity addition plan of 6,000MVA is on track. The BoD declared dividend of Rs100/share. We believe VAMP would be a key beneficiary of India’s renewable capacity addition, private capex revival, and GoI’s PLI initiatives in the manufacturing space. VAMP’s current strong order-book (Rs9.8bn, +26% YoY), coupled with the enquiry base, robust balance sheet, and improved cyclical demand tailwinds, grants us a more constructive outlook on the stock.
Q4FY25 results ahead of estimates
Q4FY25 performance was ahead of estimates led by higher-than-expected volume and realization. Revenue/EBITDA/PAT was up 24/16/4% YoY at Rs6.2bn/1.2bn/968mn. EBITDA margin declined by 135bps YoY to 18.6% as gross margin fell by 300bps/230bps YoY/QoQ to 27%. PAT was impacted by the lower other income (-27% YoY due to MTM losses) and higher tax rate at 25% as against 21.7% in Q4FY24 (FY25: 25%).
Volume growth and realization spring a surprise
Volume during Q4FY25 stood at 4,490MVA (+9.4%YoY), ahead of our estimates; this is likely due to a spillover from last year. Implied utilization stood at 128% (FY25: 110%). We expect normalization from next year. For FY25, volume increased 18% YoY at 15,460MVA. Q4 implied realization per MVA came in at a new high, of Rs1.3mn (+14% YoY). This could be on the back of the favorable mix. For FY25, realization stood at Rs1.2mn per MVA, +2% YoY.
We maintain BUY; revise down TP
We cut FY26/27E earnings by ~3% each, mainly on account of reduction in margin by ~30/50bps and lower other income, while we raise realization by 3%. We introduce FY28 estimates with revenue/EBITDA/PAT growth of 9%/10%/11%. The stock is currently trading at ~27x/22x/20x its FY26E/FY27E/28E 1YF PER. We maintain BUY, while revising down our TP by ~15% to Rs11,350 @30x 1YF FY27E earnings. Sustained positive momentum at the sectoral level provides a strong case for us remaining positive on VAMP maintaining its robust balance sheet, customer stickiness, and upcoming capacity expansion