Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
VOLTAMP TRANSFORMERS LTD
PRICE: RS.551 RECOMMENDATION: BUY
TARGET PRICE: RS.712
FY12E P/E: 10X
q Pricing continues to remain under pressure in the transformer market.
EBITDA margins sharply lower in 9M FY11. Management indicated that
further downside in margins cannot be ruled out in view of firm commodity prices and no let-up in competition intensity.
q Capital engagement has increased and the company is cautious on order
intake.
q However, contrary to ongoing pain in the industry, taking note of the
price correction, we maintain BUY. We have made downward revision to
earnings in FY11 and FY12. Consequently, we arrive at a DCF based price
target Rs.712 (Rs.893 earlier), thus valuing the stock at 12.9x FY12 earnings. Company remains debt-free and estimated cash surplus of Rs 130
per share.
We recently spoke to the management of Voltamp. Presented
are some key highlights
Subdued market conditions likely to result in lower volumes in FY11 - The
market conditions in the Transformer market continue to be challenging in view of
reduced spending by State utilities. Voltamp has sold transformers of 6556 MVA in
9M FY11 roundabout the same quantity it sold in the corresponding period of the
previous year. For FY11, the company expects to sell transformers of capacity 8500-
9000 MVA as against 10000 MVA in FY10. Thus, it is likely that the company may
report lower volumes in the current quarter.
Pricing continues to remain under pressure in the transformer
market. Management does not rule out further downside to margins
Bunching of fresh capacity coupled with slippage in anticipated spending in the T&D
sector has resulted in intense competition among players. The situation has been
further aggravated by competition from Chinese and Korean transformer makers.
Over the past two years, domestic transformer capacity has increased significantly.
Data compiled by us on the eight transformer majors indicate a close to 50% increase in capacity. As against this, the domestic market has grown at 10% pa. Exports have also not completely recovered from the setback following the credit crisis.
This combined with slippages in power generation capacity is translating into slowdown in transformer demand.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
VOLTAMP TRANSFORMERS LTD
PRICE: RS.551 RECOMMENDATION: BUY
TARGET PRICE: RS.712
FY12E P/E: 10X
q Pricing continues to remain under pressure in the transformer market.
EBITDA margins sharply lower in 9M FY11. Management indicated that
further downside in margins cannot be ruled out in view of firm commodity prices and no let-up in competition intensity.
q Capital engagement has increased and the company is cautious on order
intake.
q However, contrary to ongoing pain in the industry, taking note of the
price correction, we maintain BUY. We have made downward revision to
earnings in FY11 and FY12. Consequently, we arrive at a DCF based price
target Rs.712 (Rs.893 earlier), thus valuing the stock at 12.9x FY12 earnings. Company remains debt-free and estimated cash surplus of Rs 130
per share.
We recently spoke to the management of Voltamp. Presented
are some key highlights
Subdued market conditions likely to result in lower volumes in FY11 - The
market conditions in the Transformer market continue to be challenging in view of
reduced spending by State utilities. Voltamp has sold transformers of 6556 MVA in
9M FY11 roundabout the same quantity it sold in the corresponding period of the
previous year. For FY11, the company expects to sell transformers of capacity 8500-
9000 MVA as against 10000 MVA in FY10. Thus, it is likely that the company may
report lower volumes in the current quarter.
Pricing continues to remain under pressure in the transformer
market. Management does not rule out further downside to margins
Bunching of fresh capacity coupled with slippage in anticipated spending in the T&D
sector has resulted in intense competition among players. The situation has been
further aggravated by competition from Chinese and Korean transformer makers.
Over the past two years, domestic transformer capacity has increased significantly.
Data compiled by us on the eight transformer majors indicate a close to 50% increase in capacity. As against this, the domestic market has grown at 10% pa. Exports have also not completely recovered from the setback following the credit crisis.
This combined with slippages in power generation capacity is translating into slowdown in transformer demand.
No comments:
Post a Comment