Top Brokerage Bullish On Power Sector Small Cap Stock, Recommends Buy For 37% Gains

ICICI Securities initiates coverage on Voltamp Transformers Ltd. (Voltamp) with a BUY rating. It has assigned a target price of Rs 3,610 to the stock, claims a potential upside of 37% from its current level. The company is a key player in the transformer manufacturing space with a domestic market share of 15% (as per management), catering to diversified sectors (85% of revenue comes from private customers). It has a market capitalisation of Rs 2,686.10 crore.

Voltamp Transformers' CMP and Returns

The stock is currently trading at Rs 2,711 apiece, up 1.47% from the previous close of Rs 2,671.65 apiece. The stock recorded its 52 week low at Rs 1,729 apiece and 52 week high at Rs 3,691.20 apiece, respectively.

The stock over the past 1 month has fallen 8.54%, whereas, in the past 1 week, it has fallen 2.96%. In the last 1 year, it gained 38.71%. It gave 133.87% positive return in 3 years and 45.18% in 5 years, respectively.

Valuation and Risks

ICICI Securities said, "The stock trades at 11.8x FY24E and 10x FY25E EV/EBITDA. RoIC stands at 34%/36% for FY24E/FY25E. "We believe the orderbook would improve with capex revival and greater distribution capex. More sales would ensure better profitability on the back of improving utilisation of the industry's installed capacity. We believe any new capacity addition plans by the company could be a positive trigger going ahead."

According to the brokerage, the Risks are, "Intense competition, higher raw material prices and slow-down in industrial capex are the key risks."

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.