Shares of Voltamp Transformers Ltd have fallen nearly 30% over the past year even as order inflows rise, capacity remains tight and customers across metals, autos, renewables and data centres continue to place large orders. Investors, it seems, are trying to gauge how earnings will hold up once margins normalize.
The transformer maker has spent the past few years in a sweet spot: demand outstripped supply, supply chains were stretched and critical inputs such as cold rolled grain oriented (CRGO) steel were scarce. That buoyed pricing and lifted Ebitda margin to 19-20% in FY24-25, up from 11-12% in FY21-22. Ebitda margin stood at 18.3% in H1FY26. Elevated margin had powered much of the stock’s earlier rally.
The question now is whether that margin cycle has peaked. Industry capacity is set to rise, and Voltamp itself plans to add 6,000 mega volt ampere (MVA) by FY27, fully funded through internal accruals, taking total capacity to 20,000 MVA.
As supply improves and lead times shorten, pricing power is likely to soften. Brokerages expect Ebitda margin to decline by FY28. “While we expect a high double-digit revenue growth led by capacity expansion and a lean balance sheet, we trim our margin estimates due to rising industry supply from planned capacity additions by several players,” said Emkay Research.
Even so, Voltamp’s order book of about ₹1,480 crore provides visibility. Revenue rose 10% year-on-year to ₹906 crore in H1FY26 on the back of strong private- and public-sector capex. In Q2FY26, the company manufactured and delivered its highest-rated 160MVA/220kV transformer ahead of schedule, a marker of execution strength.
Voltamp is debt-free, generates steady free cash flow, and benefits from a diversified customer base, broad industrial capex cycle, grid expansion, and rising demand from renewables and data centres. A steady uptick in its services business adds to that comfort.
With the margin cycle past its peak, investors may now seek clarity on Voltamp’s steady-state profitability. Nuvama Research sees operating margin easing to about 17% by FY28, in line with consensus, amid pricing pressure. It estimates order inflow, revenue and earnings-per-share CAGR at 14%, 17% and 13% over FY26-28.
At about 22x FY27 estimated earnings, as per Bloomberg, the stock doesn’t appear to be trading at a premium on elevated margins. Investors are hoping that Voltamp can translate its large order book into predictable, cash-generating growth. Still, supply-chain challenges in CRGO steel and other critical components, along with geopolitical uncertainties, could introduce incremental execution risks.
