Target: ₹4,779

CMP: ₹4,210

We interacted with Voltamp Transformers’ senior management and plant officials at their Vadodara facility to gain insights on the company’s prospects and broader industry trends in the ongoing capex cycle.

Business prospects are looking robust with a healthy order pipeline. Unlike the last capex cycle, which was largely driven by investments in cement, steel, and thermal power, the present capex cycle is more broad based across 30-40 sectors.

Despite the positive outlook, competitive intensity is a key concern leading to pricing pressure. In light of this, the company has no immediate plans to enhance its installed capacity of 14,000 MVA and would take a call post the 2024 general elections.

Given the highly cyclical nature of the business, the management’s primary focus is on maintaining balance sheet health rather than growing the topline.

In FY24, the management expects to clock in volumes of 12,500-12,800 MVA, while FY25 would be closer to 13,500 MVA.

In a highly competitive industry, Voltamp has credibly maintained its 15 per cent market share in industrial application transformers. It has a marquee customer base of private corporates and profitable PSUs; it refrains from dealing with SEBs owing to the elongated payment cycle. This strategy has helped the company preserve its balance sheet strength even in times of distress where quite a few players went bust.