Voltamp Transformers - Don’t see significant margin downside from FY11 levels::Emkay

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Voltamp Transformers

Don’t see significant margin downside from FY11 levels

HOLD

CMP: Rs 575                                        Target Price: Rs 656

---

n     Q411 PAT of Rs190mn, in line despite lower revenues, due to better margins on execution of high margin orders. Volumes disappoint, realization improves on higher raw material costs

n     FY11 margins at 12.7% - do not see significant downside from here and expect FY12E margins at 12% - earnings growth from now on to be driven by volume growth.

n     Expect strong volume growth H2FY12E onwards (Q4 inflows at Rs2bn, up 17% yoy) and 15% volume growth in FY12E (low base, pent up demand and power capacity additions).

n     Cut FY12E EPS by 9% (lower volume); trading at 4.4xFY13E EV/EBITDA in line with industry; Triggers -yoy volume growth & no margin fall; Maintain Hold - with positive bias