BUY CMP 396.30 Target Price 436.00 VOLTAMP TRANSFORMERS LTD Result Update: Q4 FY13 JULY 10 th, 2013 ISIN: INE540H01012 Index Details Stock Data Sector Electrical equipment BSE Code 532757 Face Value 10.00 52wk. High / Low (Rs.) 523.00/333.10 Volume (2wk. Avg.) 649.00 Market Cap (Rs in mn. ) 4009.37 Annual Estimated Results (A*: Actual / E*: Estimated) Years FY13A FY14E FY15E Net Sales 5155.02 5567.42 5901.47 EBITDA 541.97 610.15 664.15 Net Profit 328.98 377.68 414.17 EPS 32.52 37.33 40.94 P/E 12.19 10.62 9.68 Shareholding Pattern (%) 1 Year Comparative Graph SYNOPSIS We initiated coverage of Voltamp Transformers Ltd and set a target price of Rs. 436.00 for Medium term Investment. Voltamp Transformers Ltd is one of the leading designer & manufacturers of Power & Distribution as well Dry Type (VPI) & Cast Resin (CRT) transformers. Voltamp Transformers Ltd achieved a turnover of Rs. 1749.72 million for the 4 th quarter of the current year 2012-13 as against Rs. 1946.47 millions in the corresponding quarter of the previous year. The company has reported a net profit of Rs. 149.25 million against Rs. 110.53 million reported respectively in the corresponding quarter of the previous year. Voltamp Transformers Ltd has recommended dividend on Equity Shares @ Rs. 10/- per equity share and onetime special dividend on Equity Shares @ Rs. 5/- per equity shares to commemorate Successful completion of 50 years in the transformer business for the financial year ended March 31, 2013. BSE SENSEX VOLTAMP TRANSFORMERS LTD Operating profit and PAT of the company are expected to grow at a CAGR of 5% and 8% over 2012 to 2015E respectively. Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Voltamp Transformers Ltd 396.30 4009.37 32.52 12.19 0.98 150.00 BHEL Ltd 175.55 429798.60 27.03 6.50 1.69 320.00 Techno Electric & Engineering Company 116.00 6622.60 10.62 10.92 1.13 150.00 Jyoti Ltd 63.00 1079.10 0.00 0.00 1.33 10.00
Investment Highlights Results updates- Q4 FY13, Voltamp Transformers Ltd is one of the leading designer & manufacturers of Power & Distribution as well Dry Type (VPI) & Cast Resin (CRT) transformers has reported its financial results for the quarter ended 31 st March, 2013. Months MAR-13 MAR-12 % Change Net Sales 1749.72 1946.47-10.11% PAT 149.25 110.53 35.03% EPS 14.75 10.93 35.03% EBITDA 232.49 194.92 19.27% Voltamp Transformers Ltd achieved a turnover of Rs. 1749.72 million for the 4 th quarter of the current year 2012-13 as against Rs. 1946.47 millions in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs. 232.49 millions and a net profit of Rs. 149.25 million against Rs. 110.53 million reported respectively in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 14.75 for the 4 th quarter as against an EPS of Rs. 10.93 in the corresponding quarter of the previous year. Expenditure : During the quarter variable cost rose by 10 per cent mainly on account of increase in energy cost along with consideration of depreciation in the rupee impact and witnessed coal and equipment costlier. Total expenditure in Q4 FY13 was at 4686.00 million as against Rs. 5515.13 million in Q4 FY12. Latest Updates Voltamp Transformers Ltd has recommended dividend on Equity Shares @ 100% (i.e. Rs. 10/- per equity share) and onetime special dividend on Equity Shares @ 50% (i.e. Rs. 5/- per equity shares) to commemorate Successful completion of 50 years in the transformer business for the financial year ended March 31, 2013.
Company Profile Voltamp Transformers Ltd is one of the leading designer & manufacturers of Power & Distribution as well Dry Type (VPI)& Cast Resin (CRT) transformers. The company is on the approved list of leading consultant, major houses & also with Electricity Boards in the country. Voltamp Transformers Ltd. was initially incorporated as Private Limited Company and established in year 1967 in Vadodara. Further, the Company has been converted from Private Limited to Public Limited Company w. e. f. 22.02.2006. Industry Coverage The company has earned sincere service and dedication to its distinguished customers who include leaders in Government and Semi-Government projects, Refineries, Fertilizer Plants, Power sector, Pharma, Paper, Steel, Cement sectors etc and various other Industries and State Electricity Boards. Manufacturing Facility The Company has installed facility to manufacture Oil filled Power and Distribution Transformers up to 160MVA, 220kV Class, Resin Impregnated Dry type Transformers up to 5 MVA, 11KV Class (In Technical collaboration with MORA, GERMANY) and Cast Resin Dry type Transformers up to 12.5 MVA, 33 KV Class (In Technical collaboration with HTT, GERMANY). The total installed capacity is 13000 MVA per annum on three shift basis. There are two plants located at: Makarpura, Vadodara, Gujarat for Power Transformers and Vadodara, Gujarat for Distribution and Dry Type Transformers. And the company has started this new unit at Savli for manufacturing of Oil filled Distribution Transformers and Dry Type Transformers. Business Criteria The company covers its annual sales 80% from Project Business. In most of the Projects, Transformer orders are through leading consultants of International repute like ENGINEERS INDIA LTD., KAVERNER, TATA CONSULTING ENGINEERS, MN DASTUR, AVANT GARDE, TOYO ENGINEERING, JACOBS HG, UHDE, CHEMTEX ENGG., DALAL CONSULTANTS LTD., BECHTEL, MECON, DEVELOPMENT CONSULTANTS, FICHTNER CONSULTING ENGINEERS The entire turnkey Contractors like ABB, SIEMENS, L&T etc. are regularly sourcing their Transformer requirements for their Industrial and Switchyard package projects.
Products Oil Filled Transformers Cast Resin (Dry Type) Transformers Unitised Sub-Station Induction Furnace Transformers Lighting Transformers Services The company is on the approved list of leading consultant, major houses & also with Electricity Boards in the country. The company has undertaking fully aware about the downtime loss in a production unit. Especially on VTL undertakes repair of transformers of any make and a range upto 220 KV / 200 MVA, both at its works and also at site (if adequate handling & working facilities are available). Generally most of leading manufacturers do not carry out repairs of transformers, especially if they are not their own brands. This company undertakes overhauling of transformer of continuous process plant on annual rate contract basis also. Similar contract are executed for GSFC, GACL, IPCL, IOCL, BPCL, NALCO, ONGC, AEC- SEC, UPL, NTPC like clients and undertakes overhauling of Large Power Transformers at site as a Life Enhancement Program for various customers. VOLTAMP has a complement of about 300 personnel (including 60 engineers) with branches in all major cities and service centers in important locations such as Mumbai, New Delhi, Chennai, Bangalore, Secunderabad, Pune, Bhubaneshwar, etc. spread all over the country. Marketing Network The company has earned sincere service and dedication to its distinguished customers who include leaders in Government and Semi-Government projects as well as the SME and Large companies of India. The company has its marketing network in all parts of the country.
Northern Region New Delhi Chandigarh Gaziabad Eastern Region Kolkata Bhubaneshwar Southern Region Chennai Secunderabad Bangalore Coimbatore Western Region Mumbai Pune Ahemdabad Thane Nagpur Infrastructure Plant Voltamp is currently operating four plants Oil filled Power Transformers, Distribution Transformers, Dry type Resin impregnated Transformers and Cast Resin transformers respectively. Each plant is an independent entity having full fledged individual facilities for design, manufacture, material handling, testing
and servicing of a wide range of transformers up to 160 MVA, 220 KV Class. The Manufacturing capacity totals 9000 MVA per year. It is an ISO 9001-2000 Company, accredited by ISOQAR. Testing Parameters The company has over 15,000 installations totaling hundreds of thousands of KVA capacity all over India, Nepal, Bhutan, Indonesia, Sri Lanka and Middle East Asia, powering every type of Industry, city and vital installations. In an increasingly safety conscious world, it is our major responsibility to provide safe, effective and long lasting solutions.
Financial Highlight Annual Profit & Loss Statement for the period of 2012 to 2015E (A*- Actual, E* -Estimations & Rs. In Millions) Value(Rs.in.mn) FY12 FY13 FY14E FY15E Description 12m 12m 12m 12m Net Sales 5698.05 5155.02 5567.42 5901.47 Other Income 154.55 200.20 228.23 251.05 Total Income 5852.60 5355.22 5795.65 6152.52 Expenditure -5280.82-4813.25-5185.50-5488.36 Operating Profit 571.78 541.97 610.15 664.15 Interest -4.77-4.91-5.01-5.11 Gross profit 567.01 537.06 605.14 659.05 Depreciation -82.69-76.75-80.59-83.81 Profit Before Tax 484.32 460.31 524.56 575.23 Tax -151.55-131.33-146.88-161.07 Net Profit 332.77 328.98 377.68 414.17 Equity capital 101.17 101.17 101.17 101.17 Reserves 3850.22 4001.65 4379.33 4793.50 Face value 10.00 10.00 10.00 10.00 EPS 32.89 32.52 37.33 40.94 Quarterly Profit & Loss Statement for the period of 30 SEP, 2012 to 30 JUNE, 2013E Value(Rs.in.mn) 30-Sep-12 31-Dec-12 31-Mar-13 30-June-13E Description 3m 3m 3m 3m Net sales 1107.96 1301.32 1749.72 1224.80 Other income 36.43 39.86 65.26 81.58 Total Income 1144.39 1341.18 1814.98 1306.38 Expenditure -1057.58-1216.21-1582.49-1151.32 Operating profit 86.81 124.97 232.49 155.06 Interest -1.03-1.53-0.84-0.87 Gross profit 85.78 123.44 231.65 154.20 Depreciation -18.89-19.59-19.89-17.90 Profit Before Tax 66.89 103.85 211.76 136.30 Tax -18.45-29.67-62.51-35.44 Net Profit 48.44 74.18 149.25 100.86 Equity capital 101.17 101.17 101.17 101.17 Face value 10.00 10.00 10.00 10.00 EPS 4.79 7.33 14.75 9.97
Ratio Analysis Particulars FY12 FY13 FY14E FY15E EPS (Rs.) 32.89 32.52 37.33 40.94 EBITDA Margin (%) 10.03% 10.51% 10.96% 11.25% PBT Margin (%) 8.50% 8.93% 9.42% 9.75% PAT Margin (%) 5.84% 6.38% 6.78% 7.02% P/E Ratio (x) 12.05 12.19 10.62 9.68 ROE (%) 8.42% 8.02% 8.43% 8.46% ROCE (%) 16.56% 15.08% 15.42% 15.28% EV/EBITDA (x) 7.01 7.40 6.57 6.04 Book Value (Rs.) 390.57 405.54 442.87 483.81 P/BV 1.01 0.98 0.89 0.82 Charts
Outlook and Conclusion At the current market price of Rs.396.30, the stock P/E ratio is at 10.62 x FY14E and 9.68 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.37.33 and Rs.40.94 respectively. Operating Profit and PAT of the company are expected to grow at a CAGR of 5% and 8% over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 6.57 x for FY14E and 6.04 x for FY15E. Price to Book Value of the stock is expected to be at 0.89 x and 0.82 x respectively for FY14E and FY15E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs.436.00 for Medium to Long term investment. Industry Overview The overall transformer industry in India is a matured one with domestic as well as export markets, as power sector development is key to the economic development. Demand generated from capacity additions, which is expected to be 76,000 MW during 12th five year plan; and replacement of demand, will increase demand further. Thrust and policy of Government of India to electrify all villages by 2020 and programmes like the RGGVY will provide opportunities and growth in the transformer industry. However, looking to current recession in the global market, cut throat competition, escalation in prices of raw materials, credit squeeze, delayed financial closure, delay in implementation of plans by government and environment concerns, we believe that there will be pressure on the margins in the short-run. With upcoming projects and added efforts being put in for power generation, transmission & distribution, the long term prospects are bright. However, due to sizable unutilized capacity in the transformer industry, prices are under pressure which leads to immense competition amongst the industry players. Increasing competition, delay in government projects, high volatility in the prices of major raw materials like copper, electrical steel sheets, transformer oil, steel and related components will continue to impact realizations, both at gross and net level, and hence hindering the proper growth of the industry in the near future. The practice of many MNCs operating in project business and sourcing transformers from outside vendors is still on chase, as most of them are going ahead with plan to have captive units to manufacture transformers, which
will adversely impact business volume from those MNCs in the long term. The rupee depreciation against US Dollar may also adversely impact further during the financial year. Despite the above, as on date, orders available for execution in the current year amount to Rs. 4110 millions, totaling 7075 MVA, providing revenue visibility for approx. 7-8 months. Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.
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