Shares of Voltamp Transformers Limited have zoomed over 600 per cent in the last 10 years. The multibagger stock is up over 130 per cent in the last two years. However, it is currently down over 27 per cent from its 52-week high of Rs 3,686, hit on August 4, 2022.
Should you buy the dip?
ICICI Securities, in its recent report, initiated its coverage on Voltamp Transformers with a ‘Buy’ rating and a SOTP-based target price of Rs 3,610, suggesting an upside of 35 per cent from Monday’s closing price of Rs 2669.05.
It believes that the company is a key player in the transformer manufacturing space with a domestic market share of 15% (as per management), catering to diversified sectors (85% of revenue comes from private customers). Over the years, Voltamp has developed strong relationships with clients, which has helped it have a large installed base of more than 60,000 transformers (as of Mar 22) across sectors in India and overseas markets, it added.
The brokerage also believes that the company stands to be a key beneficiary of the energy transition, private capex revival and PLI initiatives of the government in the manufacturing space. It highlighted that the company’s current order book at Rs 9 billion and strong balance sheet and improved outlook on profitability would likely keep earnings growth strong in the next three years.
Further, a pick-up in power distribution capex and investments in the manufacturing sector could lead to growth in Voltamp’s order book.
According to ICICI Securities, Voltamp’s diversified product portfolio gives it a competitive edge over its peers. The company has consistently enjoyed debt-free status, which indicates its strong focus on better working-capital management. It has a diversified clientele, including private players and select PSUs, with private players accounting for a majority of its revenue.
Voltamp Transformers Ltd. was initially incorporated as a Private Limited Company and established in the year 1967 in Vadodara. Further, by a special resolution passed by the shareholders under sections 31 and 44 of the Companies Act, 1956, the company converted from Private Limited to a Public Limited Company.
The company installed a facility to manufacture Oil-filled Power and Distribution Transformers up to 160MVA, 220kV Class, Resin Impregnated Dry-type Transformers up to 5 MVA, 11KV Class (In Technical collaboration with MORA, GERMANY) and Cast Resin Dry-type Transformers up to 12.5 MVA, 33 KV Class (In Technical collaboration with HTT, Germany).
Also read: Multibagger stock: 1200% return in 10 years! Brokerages see 25% upside in this smallcap stock
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