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Voltamp Transformers zooms 9%, stock up 32% in two weeks on strong fourth quarter results

Shares of Voltamp Transformers hit a record high of 2,375 rupees, after a 9% rally on BSE in Tuesday’s trade in an otherwise weak market. The stock has now posted gains for the past 10 consecutive trading sessions after the company reported strong earnings for the quarter ending March 2022 (Q4FY22). The board also recommended a dividend of Rs 35 per share. Meanwhile, the S&P BSE Sensex was down 0.55% at 55,618 at 10:11 a.m.

The stock of the company specializing in electrical transformers has climbed 32% in the past two weeks, against a 2.4% rise in the benchmark. The stock surpassed its previous high of Rs 2,255 hit on December 6, 2021.

In Q4FY22, Voltamp’s sales increased by 36.3% year-on-year (YoY) to Rs 387 crore, thanks to the execution of healthy order entries. Profit after tax (PAT) jumped 67% year-on-year to Rs 51.9 crore from Rs 31.1 crore in Q4FY21. Earnings before interest, tax, depreciation and amortization (EBIDTA) jumped 102% year on year to Rs 66.7 crore with EBITDA margins improved by 561 basis points year on year to 17.2%. Margins increased mainly due to lower personnel costs and a healthy gross margin.

Voltamp Transformers reported excellent numbers due to accelerated shipments and execution, as well as healthy operating margins despite high raw material inflation. The backlog remains strong at around Rs 600 crore (0.5x TTM revenue) as in Q4FY22, providing revenue visibility for the coming quarters, the YES Securities analyst said.

The survey continues to remain dynamic given increased public and private investment spending in sectors such as infrastructure, water, power, mining, oil and gas, ports, pharmaceutical industry, data centers, etc. However, in view of the sharp increase in pressure on input costs and the shortage of CRGO silicon steel, a key raw material, management decided to focus on short cycle orders with assured payment terms. , the brokerage said in its earnings update.

“We believe the company is one of the best assets for the future recovery of industrial demand, given its industry-driven business model. We remain positive on the company given its strong business model, debt-free balance sheet and its free cash flow generation (current cash + investment of around Rs 570 crore),” the brokerage firm said with a “buy” rating on the stock and 12-month price. target of Rs 2,540 per share.

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