Voltamp Transformers gets 'Buy' call from Nuvama; 29% upside seen

After relatively muted growth in FY25-26E, analysts expect a step-up in FY27, with earnings per share (EPS) forecast to rise 13-15 per cent year-on-year (Y-o-Y)

Nuvama Institutional Equities has initiated coverage on Voltamp Transformers shares with a ‘Buy’ rating and a target price of ₹10,200 per share, implying 28.9 per cent upside from Monday’s close of ₹7,907.9. 

 

On the valuation front, the brokerage sees Voltamp Transformers as inexpensive. 

 

“We find Voltamp Transformers inexpensive, trading at 20 times FY28E (against peers at 30–40 times). With a 13 per cent earnings per share (EPS) compound annual growth rate (CAGR) and 19 per cent return on equity (RoE) over FY26E–28E, and revenue/PAT CAGR of 17 per cent/13 per cent, the company, in our view, is poised to outperform other private-capex-linked names,” Nuvama said.

Why is Nuvama Institutional Equities bullish on Voltamp Transformers?

Growth drivers: RE, data centres, EV infra, semicon, private capex

As a gold-standard transformer manufacturer, Voltamp Transformers is entrenched in long-medium voltage industrials, transmission and distribution (T&D) and renewable energy (RE) and the brokerage expects the company to benefit from:

• A T&D upcycle led by large-scale renewable integration into the grid.
• Rising transformer from data centres, EV charging infrastructure and emerging semiconductor facilities.
• A broad-based revival in private sector capex, where Voltamp Transformers is already a preferred supplier.

After relatively muted growth in FY25–26E, analysts expect a step-up in FY27, with EPS forecast to rise 13–15 per cent Y-o-Y on the back of about 18 per cent revenue growth, supported by new capacity coming onstream.  ALSO READ | Nuvama says 'Buy' again on Coromandel Int'l; 3 drivers behind the call

Business model: Diversified, short-cycle and de-risked

Unlike many peers that chase large, tender-driven orders, the company has consciously built a short execution cycle business, typically completing orders within 8–10 months. Over the past 15–20 years, it has transitioned from being a largely T&D-focused player into a diversified industrial supplier, now catering to over 3,000 customers across more than 20 industries.

 

This diversification lowers client and end-market concentration risk, according to Nuvama. The current installed capacity of 14,000 MVA is running at over 100 per cent capacity utilisation, underscoring strong demand visibility. Efficient execution and disciplined working capital management have kept the cash conversion cycle tight, at roughly three weeks to six months, noted Nuvama.

Profitability moat: Selective orders, premium realisations

Voltamp Transformers operates primarily in the sub-220kV segment, with a strong presence in distribution transformers — a segment crowded with 150–200 players, typically limiting pricing power. Despite this, the company has carved out a niche as a trusted partner for private-sector customers, allowing it to be selective about orders and to prioritise projects with better margins and working capital terms, according to analysts.

 

This approach has helped the company sustain:

• Operating profit margins (OPM) of around 17–18 per cent.
• Return on equity (RoE) of 18–20 per cent.
• A robust 50 per cent EPS CAGR over the past five years.

The company enjoys a premium realisation of about ₹1.3 million per megavolt-amperes (MVA), against an industry average near ₹1 million per MVA. While some of this premium is gradually eroding as peers improve and competition intensifies — a trend reflected in expectations of modestly lower margins ahead — analysts believe this margin normalisation is already factored into forecasts.  ALSO READ | Motilal Oswal flags NTPC Coal-to-Gas boost, but cautions on execution

Capacity expansion: 6,000 MVA brownfield capex at Jarod

To capture the next leg of demand, Voltamp Transformers is investing around ₹200 crore, fully funded through internal accruals, to expand transformer manufacturing capacity by 6,000 MVA at its Jarod facility near Vadodara (up to 220kV). Once commissioned, total capacity will rise from 14,000 MVA to 20,000 MVA.

 

The new plant is expected to come onstream by Q1 FY27, with capacity utilisation ramping up to about 60 per cent in FY27 and then to full utilisation thereafter. 

 

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