Voltamp Transformers Marginally below; Maintain earnings and Hold ::Emkay

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Voltamp Transformers

Marginally below; Maintain earnings and Hold

HOLD

CMP: Rs 500                                       Target Price: Rs 491

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n     PAT of Rs94mn (flat qoq and yoy) is below estimate due to both lower dispatch (revenues Rs1.35bn vs estimated Rs1.41bn) and EBITDA margins (9.2% vs. est. of 10.6%).

n     Order book at Rs4.4bn (7938MVA) is up 1% yoy. Order inflows are healthy at Rs1.5bn, up 5% yoy and 53% qoq. However, mgmt continues to highlight competition in the sector.

n     Has built in 10%/11% EBITDA margins in FY12E/FY13E. Considering - (1) 1H margins are at 9.3%, (2) healthy order inflows and (3) 2H is normally better - we retain our estimate.

n     Might see continued pressure in nos. for 2-3 qtrs. But looking at Voltamp’s track record, do not see significant downside in stock which is trading at near 1yr fwd book. Maintain ‘Hold’