3rd   June, 2011 
Result Update 

Electric Equipments-Transformers Voltamp Transformers Ltd Reduce

Voltamp Transformers Ltd a  niche player in the transformer sector declared 
CMP Rs 567
its  Q4FY11  results  which  remained  much  below  our  estimates  on  net  sales. 
Target Price Rs 508
Net  sales  reported  a  de  ‐growth  of  18.2%  at  Rs  1,489.8  mn.  However  the 
EBITDA  and  PAT  remained  well  above  our  estimates  due  to  15% 
Key Data improvement in the realizations on y‐o‐y basis. EBITDA declined by 27.4% at 
Face value 10
Rs  268.1  mn  with  EBITDA  margins  declining  by  230  bps  at  18%.  PAT 
Market cap (Rs in mn) 5738.0
declined by 28.2% at Rs 189.8 mn with a decline of 350 bps in PAT margins.    
Total O/S shares mn 10.12
Free Float 54.93%
52 week High/Low 1135/480 Key Highlights
Avg. Monthly Volume (BSE) 27946 Decline in volumes takes toll on Q4FY11: During Q4FY11 net sales reported a 
`
Avg Monthly volume (NSE) 48823
de ‐ growth of 18.2 % at Rs 1489.8 mn which was mainly due to decline in 
BSE Code 532757
volumes  by  28.8%  at  2480  MVA.  However  during  Q4FY11  there  was  a 
NSE Code VOLTAMP
Bloomberg code VAMP IN 15% improvement in the realizations on y‐o‐ y basis. The improvement in 
Beta 0.53 realizations  has  been  witnessed  since  H2FY11.  Favourable  product  mix 
Date of Incorporation 1967 and  increasing  raw  material  prices  are  seen  as  the  major  factors 
Last Dividend Declared 90% contributing  to  the  improvement  in  the  realisations.  For  FY11  the 
Six month's return -21.7%
revenues  in  MVA  terms  has  declined  by  10.4%  at  8973  MVA  with  an 
Indices BSE 500
FCCB's Outstanding NA
improvement  of  8.3%  in  realizations.  The  revenues  for  FY11  reported  a 
Warrants outstanding NA decline of 2.9% at Rs 5262.9 mn. 
` Higher raw material cost dampens the EBITDA margins: For FY11 raw material 
cost  as  a  %  of  sales  increased  by  590  bps  at  81.8%.  Increased  employee 
One Year Price / Volume Chart cost and other expenditure added to the margin pressure for FY11 which 
1200 800000
700000
resulted  in  EBITDA  margins  declining  to  12.7%  from  19.5%.  For  FY11 
1000
600000
800
500000
EBITDA  declined  by  36.9%  at  Rs  667.9  mn.  PAT  declined  by  37%  at  Rs 
600 400000

400
300000 518 mn with a fall of 539 bps in the PAT margins at 9.8%. 
200000
200

0 0
100000
` Interest and depreciation cost weighs high on profits after tax: During  FY11 
Jun-10 Jul-10 Aug-10 Oct-10 Nov-10 Jan-11 Feb-11 Mar-11 May-11
interest cost & depreciation increased by 21% and 26.6% at Rs 7.5 mn and 
Closing Price Volumes
Rs 74.9 mn respectively.  
Source: Capitaline
` Order book stands at Rs 4250 mn: The order book of VTL stood at Rs 4,250 
mn which is equivalent to 7,500 MVA. The current order book indicates a 
Share Holding Pattern (31st March 2011) further decline in the realizations and hence the margins too are likely to 
FII's
29.1% Public & Others remain weak in future. Of the total order book, almost 92% of the order 
10.8%

Non Promoters (Body

book is from Non SEB’s. 
Corporate)
9.3%
Financial Snapshot                                                Rs in Mn
Promoters Banks/MF's/Institutions
45.1% /Ins
5.7%
Particulars FY 08 FY 09 FY 10 FY11P FY12E

Source: Company, KJMC Research

Net Sales 5553.5 6430.6 5419.7 5258.2 5310.0
EBITDA 1178.8 1498.8 1057.3 667.8 660.0
EBITDA margins% 21.2% 23.3% 19.5% 12.7% 12.4%
Shefali Doshi PAT 799.2 1148.3 824.8 517.6 512.9
Research Analyst PAT margins% 14.4% 17.9% 15.2% 9.8% 9.7%
Phone-022 4094 5500 Ext. 202 EPS(Basic) 79.0 113.5 81.5 51.2 50.8
Email - shefali.doshi@kjmc.com P/E (x) 7.2 5.0 7.0 11.1 11.2
EV/EBITDA (x) 4.4 3.3 4.4 6.4 6.2
ROE (%) 60.5 53.5 27.5 14.6 13.1
Source: Company, KJMC Research

Voltamp Transformers Ltd 1

 Other Highlights
Other  income  for  the  quarter  declined  by  11.8%  at  Rs  43.4  mn  during 
Q4FY11  and  by  20.9%  during  FY11  .It  mainly  constituted  of  income  from 
investments,  interest  on  fixed  deposits,  miscellaneous  income  and  bill 
discounting from suppliers. 

Q4FY11 Result Update Rs in Mn

Particulars Q4FY11 Q4FY10 % growth FY11 FY10 % growth
Net Sales 1489.8 1821.3 -18.2% 5262.9 5419.7 -2.9%
Raw materials 1132.3 1383.6 -18.2% 4307.3 4111.1 4.8%
Employee Cost 38.2 40.4 -5.4% 159.3 154.9 2.8%
Other expenditure 51.2 27.8 84.2% 128.4 95.7 34.2%
Total Expenditure 1221.7 1451.8 -15.8% 4595.0 4361.7 5.3%
EBITDA 268.1 369.5 -27.4% 667.9 1058.0 -36.9%
EBITDA margins (%) 18.0% 20.3% - 230 bps 12.7% 19.5% - 683 bps
Interest 1.5 1.3 15.4% 7.5 6.2 21.0%
PBDT 266.6 368.2 -27.6% 660.4 1051.8 -37.2%
Depreciation 22.7 19.6 15.8% 74.9 59.7 25.5%
Other Income 43.4 49.2 -11.8% 182.6 230.9 -20.9%
PBT 287.3 397.8 -27.8% 768.1 1223.0 -37.2%
Tax 97.5 133.3 -26.9% 250.1 397.7 -37.1%
PAT 189.8 264.5 -28.2% 518.0 825.3 -37.2%
PAT margins (%) 12.7% 14.5% - 350 bps 9.8% 15.2% - 539 bps
Equity Capital 101.1 101.1 101.1 101.1
FV 10.0 10.0 10.0 10.0
No. of shares 10.1 10.1 10.1 10.1
EPS 18.8 26.2 -28.24% 51.2 81.6 -37.2%
Source: Company, KJMC Research

Future Outlook
The  outlook  for  2011‐12  is  not  very  positive  for  the  transformer  sector  on 
account of challenges being faced by the players on price realizations due to 
stiff  competition  and  the  margin  pressure  due  to  raw  material  price 
pressure. Hence inspite of healthy balance sheet and strong clientele base the 
short term outlook for Voltamp is not very healthy and positive. 

In  view  of  the  above  concerns  we  are  further  downgrading  our  earlier 
estimates for FY12E in line with the FY11 performance as under: 

Change in estimates
FY12E
Particulars
New Old
Net Sales 5310.0 6670.0
EBITDA 660.0 727.0
EBITDA margins% 12.4% 10.9%
PAT 512.9 662.8
PAT margins% 9.7% 9.9%
EPS 50.8 65.6
Source: Company, KJMC Research

Voltamp Transformers Ltd 2

 Valuation
At the CMP of Rs 567 the stock is trading at 11.2x its FY12E earnings of Rs 
50.8. 

We downgrade our recommendation to “Reduce” from “hold” on the stock 
with  target  price  of  Rs  508  which  is  10x  FY12E  earnings  of  Rs  50.8  and 
translates into a potential downside of 10% from the CMP.  

Voltamp Transformers Ltd 3

Financial Summary

Profit & Loss Statement in Rs. mm Balance Sheet in Rs. mm

Particulars FY08 FY9 FY10 FY11P FY12E Particulars FY08 FY9 FY10 FY11P FY12E

Net Revenue 5553.5 6430.6 5419.7 5258.2 5310.0 Sources of Funds

Growth % 37% 16% -16% -3% 1% Share Capital 101.2 101.2 101.2 101.2 101.2

4339.3 Reserve & Surplus 1545.5 2545.5 3244.3 3635.4 4021.8

Raw material cost 3913.7 4696.7 4111.5 4301.2
Total Debt 10.4 0 0 0 0
Employee cost 168.3 177.8 155.0 157.7 172.6
Total 1657.1 2646.7 3345.5 3736.6 4123.0
Other expenditure 105.9 101.6 95.9 131.5 138.1
Application of Funds
Total Expenditures 4,187.9 4,976.1 4,362.4 4,590.4 4,650.0
Net Block 177.5 180.4 430.7 545.8 525.24
EBITDA 1178.8 1498.8 1057.3 667.8 Capital work in progress 16.9 143.8 143.8 143.8 143.8
660.0
EBITDA Margin (%) 21.2% 23.3% 19.5% 12.7% 12.4% Investments 581 1352.5 1352.5 1352.5 1352.5

Other income 107.5 239.7 230.9 182.6 200.0 Inventories 806.5 522.6 813.0 876.4 1239.0

Sundry Debtors 826.1 1018.5 1083.9 1051.6 1062.0

Depreciation 31.3 44.6 59.7 74.9 90.56
769.5 Cash & cash Equivalents 46.1 60.9 33.0 260.7 417.0
EBIT 1255 1693.9 1228.5 775.5
Loans & Advances 94.2 62.6 62.6 62.6 62.6
EBIT Margin (%) 22.6% 26.3% 22.7% 14.7% 14.5%
Current Liabilities &
893.9 699.1 578.9 561.8 684.1
provisions
Interest Expenses 5 4.6 6.2 7.5 8.5
Net Current Assets 879.0 965.5 1413.5 1689.5 2096.4
Tax 450.8 540.9 397.5 250.4 248.1
Deferred tax assets 2.53 4.6 4.6 4.6 4.6
Adjusted PAT 799.2 1,148.4 824.8 517.6 512.9 TOTAL 1657.1 2646.7 3345.5 3736.6 4123.0
 

Cash Flow Statement in Rs. mm Ratios

Cash Flows FY08 FY9 FY10 FY11P FY12E Cash Flows FY08 FY9 FY10 FY11P FY12E
Profitability & Return
NET Profit before tax & Ratios
1249.6 1689.0 1222.3 768.0 761.0
exceptional items
EBITDA Margin (%) 21.2% 23.3% 19.5% 12.7% 12.4%
Depreciation 31.3 44.6 59.7 74.9 90.6 NP Margin (%) 14.39% 17.86% 15.2% 9.8% 9.7%
EPS 79.0 113.5 81.5 51.2 50.8
Changes in Working capital 625.0 (93.8) (475.9) (48.3) (250.7) CEPS 82.6 118.3 88.0 59.4 60.6
BVPS 162.7 231.8 309.4 370.0 408.2
Others including taxes 411.0 460.9 397.5 250.4 248.1
ROE 48.5% 43.4% 24.7% 13.9% 12.4%
Net Cash Flow from ROACE 94.3% 78.7% 41.0% 21.9% 19.6%
45.6 105.9 40.9 54.4 35.3
Operating Activities Operating efficiency and
other ratios
Capex (99.4) (174.3) (310.0) (190.0) (70.0) Debtors T/o 6.7 5.8 6.1 6.1 6.1
Inventory T/o 5.7 54.3 8.1 7.3 5.2
Investments (348.7) (771.4) 0.0 0.0 0.0
Interest Coverage (x) 251.0 360.4 198.1 103.4 90.5
Asset/Turnover (x) 4.2 29.9 18.1 14.9 13.5
Loans 1.5 (10.4) 0.0 0.0 0.0
D/E (x) 0.0 0.0 0.0 0.0 0.0

Dividends paid (94.7) (148.0) (126.5) (126.5) (126.5) Valuation Ratios

P/E (x) 7.2 5.0 7.0 11.1 11.2
Net change in cash (48.6) 14.8 (28.0) 227.8 156.3 P/CEPS (x) 6.9 4.8 6.4 9.5 9.4
P/BV (x) 3.5 2.4 1.8 1.5 1.4
Opening cash 94.7 46.1 60.9 33.0 260.7 Mcap/Sales (x) 1.0 0.9 1.1 1.1 1.1
EV/Sales (x) 1.0 0.9 1.1 1.0 1.0
Closing cash 46.1 60.9 33.0 260.7 417.0
EV/EBITDA (x) 4.4 3.3 4.4 6.4 6.2
 
Source: Company, KJMC Research

Voltamp Transformers Ltd 4

 Mr. Girish Jain   Executive Director  jaingirish@kjmc.com  2288 5201 (B) 
     
Mr. Suresh Parmar   A.V.P. ‐ Institutional Equities  suresh.parmar@kjmc.com  4094 5551 (D) 
     
Mr. Vipul Sharma   A.V.P. ‐ Institutional Sales  vipul.sharma@kjmc.com  4094 5556 (D) 
   

Recommendation Parameters 
 

Expected returns in absolute terms over a one‐year period 
Buy  ‐  appreciate more than 20% over a 12‐ month period 
Accumulate  ‐  appreciate 10% to 20% over a 12‐ month period 
Hold / Neutral  ‐  appreciate up to 10% over a 12‐ month period 
Reduce  ‐  depreciate up to 10% over a 12‐ month period 
Sell  ‐  depreciate more than 10% over a 12‐ month period 

 
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Voltamp Transformers Ltd 5