Religare maintains Buy on Voltamp Transformers with target of Rs 884
Religare Securities has maintained ‘Buy’ recommendation on Voltamp Transformers with an upgraded price target of Rs 884.
By ET Bureau |
MUMBAI: Religare Securities has maintained ���Buy��� recommendation on Voltamp Transformers with an upgraded price target of Rs 884.
���Voltamp Transformers recorded a contraction of 38.7% YoY in net sales to Rs 1billion during Q1FY10. This decline stemmed from a 37.4% drop in sales volume to ~1,550mva, largely due to a higher base in Q1FY09 when deliveries totaling ~700mva were deferred from Q4FY08. The realisation was flat at Rs 672/kva for the quarter. EBITDA fell 52.8% YoY to Rs 162mn, with a sharp margin decline of 466bps to 15.6% during the quarter. This is attributed to an increase in raw material costs, employee cost and other expenditure.
As a percentage of sales, raw material cost increased 135bps YoY to 73.5%, while employee expenses rose 113bps to 4.3% and other expenditure climbed 217bps to 6.7%.
The company reported a 35.8% YoY decline in PAT to Rs 149mn ��� slower than the fall in EBITDA due to a sharp increase in other income. Voltamp recorded a 137% increase in other income to Rs 72mn for the quarter.
We have trimmed our FY10 PAT estimate by 12% to factor in slightly lower volumes and below expected margins. The stock is trading at 9.2x and 7.6x its FY10E and FY11E earnings. We remain positive on Voltamp given the healthy demand outlook in the long term and strong balance sheet position. Rolling forward our valuation to FY11, we revise our target price for the stock to Rs 884 from Rs 635 and maintain our Buy rating,��� the brokerage said.
���Voltamp Transformers recorded a contraction of 38.7% YoY in net sales to Rs 1billion during Q1FY10. This decline stemmed from a 37.4% drop in sales volume to ~1,550mva, largely due to a higher base in Q1FY09 when deliveries totaling ~700mva were deferred from Q4FY08. The realisation was flat at Rs 672/kva for the quarter. EBITDA fell 52.8% YoY to Rs 162mn, with a sharp margin decline of 466bps to 15.6% during the quarter. This is attributed to an increase in raw material costs, employee cost and other expenditure.
As a percentage of sales, raw material cost increased 135bps YoY to 73.5%, while employee expenses rose 113bps to 4.3% and other expenditure climbed 217bps to 6.7%.
The company reported a 35.8% YoY decline in PAT to Rs 149mn ��� slower than the fall in EBITDA due to a sharp increase in other income. Voltamp recorded a 137% increase in other income to Rs 72mn for the quarter.
We have trimmed our FY10 PAT estimate by 12% to factor in slightly lower volumes and below expected margins. The stock is trading at 9.2x and 7.6x its FY10E and FY11E earnings. We remain positive on Voltamp given the healthy demand outlook in the long term and strong balance sheet position. Rolling forward our valuation to FY11, we revise our target price for the stock to Rs 884 from Rs 635 and maintain our Buy rating,��� the brokerage said.
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