Shares of Voltamp Transformers hit a record high of Rs 2,375, on rallying 9 per cent on the BSE in Tuesday’s trade in an otherwise weak market. The stock has now logged gains in the last 10 straight trading sessions after the company reported strong earnings for the quarter ended March 2022 (Q4FY22). The board also recommended a dividend of Rs 35 per equity share. Meanwhile, the S&P BSE Sensex was down 0.55 per cent at 55,618 at 10:11 am.
The stock of the company engaged in electrical transformers has zoomed 32 per cent in past two weeks, as against a 2.4 per cent rise in the benchmark index. The stock surpassed its previous high of Rs 2,255 touched on December 6, 2021.
In Q4FY22, Voltamp’s sales grew by 36.3 per cent year on year (YoY) to Rs 387 crore driven by execution of healthy order inflows. Profit after tax (PAT) jumped 67 per cent YoY to Rs 51.9 crore from Rs 31.1 crore in Q4FY21. Earnings before interest, taxes, depreciation, and amortization (EBIDTA) jumped 102 per cent YoY at Rs 66.7 crore with EBITDA margins improved 561 bps YoY at 17.2 per cent. The margins were higher mainly on account of fall in employee costs and healthy gross margin.
Voltamp Transformers reported an excellent set of numbers owing to ramp up in dispatches and execution along with healthy operating margins despite high raw material inflation. Order book remains strong at around Rs 600 crore (0.5x TTM revenue) as on Q4FY22, providing revenue visibility for next few quarters, analyst at YES Securities said.
Enquiry continues to remain buoyant given rise in spending in capex from both public and private across sectors such as infra, water, power, mining, oil & gas, ports, pharma, data centers, etc. However, given the steep rise input cost pressure and shortage of CRGO silicon steel a key raw material, management has decided to focus on short cycle orders with assured payment terms, the brokerage firm said in its result update.
“We believe the company is one of the best plays for future upturn in industrial demand given its industrial focused business model. We remain positive on the company considering its strong business model, debt free balance sheet and consistent free cash flow generation (current cash + investment around Rs 570 crore),” the brokerage firm said with ‘buy’ rating on the stock and 12-month target price of Rs 2,540 per share.