Voltamp reported mixed set of numbers for the quarter as though the revenue missed our estimates, this was offset by higher than expected EBITDA margins. Lower than expected other income led to profit miss.
The demand scenario for capital goods makers in general remains weak. In this scenario, the company's focus remains on taking good quality orders that are fairly priced and have reasonably good credit profile. This is manifested in the company's balance sheet which has shown further improvement in working capital turns and cash generation.
Valuation and Outlook
Voltamp is currently trading at 12.7x and 11.7x FY19E and FY20E earnings respectively. Valuations are attractive compared to peers and more so considering that management remains prudent and has been able to preserve quality of balance sheet even through years of industry distress. Voltamp remains one of the best stocks to play future upturn in industrial demand. Maintain BUY with unchanged price target of Rs 1350, valuing the stock at 13x FY20E earnings.