Voltamp Transformers net profit grew 10.7% YoY to Rs 757 million for the quarter ended September 2024, compared to a profit of Rs 684 million a year ago. Net sales rose 4.3% to Rs 3,977 million during the period as against Rs 3,814 million in July-September 2023.
For the year ended March 2024, Voltamp Transformers reported 53.7% increase in net profit to Rs 3,074 million compared to net profit of Rs 1,999 million during FY23. Revenue of the company grew 16.7% to Rs 16,162 million during FY24.
Anyone know the reason behind fall in revenue for the jun and sep quarter?. Thereâs slight drop in margins also.
For companies in capital goods space there is always lumpiness in order flow and execution which impacts the quarterly numbers, more so of small companies who have high portfolio concentration in a single product. So we wonât see a smooth linear increase in yoy numbers. From that perspective inter-quarter variations in PAT and margins shouldnât be worrying unless there is dramatic drop or some negative commentary from the management.
Overall outlook for the transformer sector in India is still positive and Voltamp management (a very conservative one) has maintained that. They have announced CAPEX for capacity expansion and knowing their disciplined execution they wont do that just to please the market.
I believe stock has run a lot, currently quoting 2x its historical valuations so these minor disappointments in numbers are always expected to cause a decent 20-30% corrections in stock prices.
Disc- Invested and adding at corrections
Management has informed that there are pressures in sourcing CRGO sheets while the other management such as Shilchar informed that there is no issue sourcing CRGO material. TARIL has not expressed any difficulty in sourcing the material. Voltamp has seen the depressed results in the just ended qtr while TARIL and Shilchar have given bumper results. Voltamp is getting corrected while the other are in upward trend.
Discl: Invested in all the three while pruned some qty in Voltamp and increased exposure in the other two.
There is always an issue of quality of disclosure. I refuse to believe that highly experienced management of Voltamp with long track record of excellent execution will face certain supply chain issues that others are not even acknowledging.
Letâs look at TRIL and Schilchar more closely.
TRIL reported good numbers because of low base effect. Company and stock did nothing for many years till Q2 of last year. Then suddenly there were 3-4 good quarters which makes their quarterly results look super duper. Stock prices and valuations went sky-high in no time. TRIL trades at 10 times sales (voltamp trades at 6 times).
Shilchar shows slightly better execution pedigree (which is to not say much) than TRIL but I canât figure out for life of me the sudden 2X jump in their operating margin in last 1 year. You canât have such big divergence between margins between one player and the rest of the sector. And if itâs there itâs not sustainable.
Valuation wise, the less said the better, Shilchair, trading at 15x sales, thanks to and lots of speculation seen in the stock.
In general I am wary of the companies, in tailwind sectors, that suddenly start showing good numbers after several years of average or non performance. Mostly it takes either great luck or magic for such turnaround.
I have seen many cases of book cooking or corporate governance coming to light, crashing stock prices. Look no further than Brightcom which was reporting excellent figures during a time when digital marketing industry was in a duress. Not saying TRIL and Schlchair are up to something but itâs always good to ask questions.
I think the transformer story is in tact.
Voltamp won the new order, though not very big.
does anyone have the analysis on the capacity usage of these players vs how much capex, source of funding etc? Pls post even if these are scattered info (not in organised format).
This may have some info that you are looking at ( though bit dated now. TRIL, CG, Voltamp each has significant capacity addition from that time, can be tracked easily in recent communications by each ):
When the industry is in strong tailwind and became sellers market, unable to understand the margin erosion. Waiting period for delivery in USA has become 2 to 3 yrs. Shilchar is in Distribution transformers in renewable energy sector while TARIL is in high capacity Power Transformers. All the three are not strictly comparable. INDOTECH also reported good numbers. It is my perception if they are not able to command margin in a Too good to be true market, there may be some strong reasons for the Not so good results. Respectfully I disagree with you on honesty front of fudging possibility of results by the other two. I have exposure in all the three from lower levels .
Completely agree with you. When a structural tail wind starts, it takes at least 12-18 months for new capacities to emerge to fulfill the rising demand. During that period, companies having good quality and spare capacities make outsize gains. It does not makes sense to compare their performance with their past, as demand environment has changed completely. With yesterdayâs Trump victory, AI, data centers and Cryptos (and crypto mining) will be given big push, which has potential to drive power demand further.
Coming back to company specific issues, it is hard to note why Voltamp did not perform in such a benign environment. Company not doing any investor communications like investor presentations and quarterly conference calls is a big negative for any investor like me.
Disclosure - invested in TRIL and Shilchar. Interested in Voltamp but can not invest due to lack of information
As someone said markets in the short term are voting machines and in the long run weighing machines.
We should give 3-5 years to each company to let sectoral euphoria settle down, valuation mean reversion to kick in and market cycles to play out. Comparing their business and stock performance on a 1 year basis is too short-termish in my view.
For a long term and risk averse investor like me I am happy to be invested in Voltamp and not be discouraged by one-off muted performance when company has done well throughout the market cycles for last many years and handsomely awarded their investors.
Am not doubting the capability of the company. As a new investor, the real concern is they have two consecutive quarter of declining sales, which didnât happen in last 3 year. If thereâs decline in one quarter it did recover next quarter. Despite sector in upcycle, wanted to know if thereâs any information available in public domain.
SOICâs observations
Yup decent observation but there is one thing lacking here both TRIL and Shilchar have renewable exposure. Shilchar has 100% focus on renewable. Voltamp is not so much into renewable maybe that is bigger contributer to less momentum. Voltamp management is seems to be very wise.
When we talk about transformer shortage it applies to all kinds of transformers i donât know the split of non renewable to renewable transformers but that opens them to a very big risk especially Shilchar they have all thier eggs in one basket.
22 carat shines more than 24.
Articles say that Voltamp has capacity of about 13,000 MVA. TARIL has about 45,000 MVA. That would mean TARIL has a much better revenue visibility unless I am missing something. Their new capacity addition will only come online in July 2026. So would that be a risk to continued revenue growth to Voltamp?
