Emkay trims target on Voltamp Transformers by 12%, but retains 'Buy'

While Emkay expects high double-digit revenue growth supported by capacity expansion and a lean balance sheet, it has trimmed margin assumptions due to rising industry supply from capacity additions

Emkay Global Financial has reiterated its ‘Buy’ rating on Voltamp Transformers stock while cutting its target price by 12 per cent to ₹10,000 from ₹11,350 earlier, valuing the stock at 25x FY28E Earnings per share (EPS). The brokerage said the company’s strong market position—about 15 per cent share in the industrial transformer segment—stems from deep design and manufacturing capabilities and a broad product portfolio serving a diversified customer base, with private clients contributing roughly 85 per cent of revenue.

 

While the brokerage still expects high double-digit revenue growth supported by capacity expansion and a lean balance sheet, it has trimmed margin assumptions due to rising industry supply from capacity additions across players.

Healthy order inflows across diversified end-markets

Voltamp’s order inflows have remained robust, rising 37 per cent/12 per cent/37 per cent year-on-year (Y-o-Y) in FY24, FY25 and H1FY26, respectively, aided by a well-diversified client base. Key end-markets driving growth include metals and mining, infrastructure, commercial real estate, transmission companies (such as GETCO and other private transcos) and renewables, according to the brokerage. 

 

Management indicated a strong enquiry pipeline, backed by healthy industrial demand and rising orders from power utilities for grid expansion and strengthening. The current order book stands at around ₹1,400 crore, equivalent to about 0.7x trailing 12-month revenue.  ALSO READ | GE Vernova gets new 'Add' from YES Securities; check target price here

Capacity expansion to lift installed base to 20,000 MVA

With demand strong and existing facilities running at full tilt, Voltamp has been operating at its current total capacity of 14,000 MVA. To address this, the company is investing ₹200 crore—fully funded via internal accruals—to add 6,000 MVA of capacity at its Vadodara plant for transformers up to the 220 kV range.

 

The new facility is expected to come onstream by Q1 FY27E, with capacity utilisation projected at 50–60 per cent in FY27E, ramping up thereafter. Post-expansion, total installed capacity will rise to 20,000 MVA, positioning Voltamp to capture incremental demand from industrial and utility customers.  ALSO READ | Groww slips 4% as one-month lock-in ends; here's what analyst suggest

Margins seen normalising as industry supply ramps up

Voltamp’s profitability has benefited from a favourable cycle in recent years, with EBITDA margins improving from 12.3 per cent in FY22 to 18.9 per cent in FY25. This sharp expansion was driven by a demand–supply gap, elongated lead times and supply chain disruptions in CRGO steel and other critical inputs, which supported pricing power and premiums.

 

However, with multiple players—including Voltamp—adding capacity and supply chains normalising, Nuvama expects margins to gradually normalise from peak levels. The brokerage has therefore moderated its margin forecasts, even as it remains constructive on the company’s growth prospects.

 

Disclaimer: View and outlook shared on the stock belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.