Result Update: Voltamp Ltd - BUY - TP Rs.1320 - Kotak

Voltamp reported good set of numbers for the quarter revenue and EBITDA topping our estimates. However, lower than expected other income led to profit miss.

Key Highlights

- Order book remains healthy at Rs 4.5 bn.

- 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 continued improvement in cash generation.

Valuation and Outlook

Voltamp is currently trading at 10x and 9x 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 marginally revised price target of Rs 1320 (Rs 1350 earlier), valuing the stock at 13x FY20E earnings.

Source : Equity Bulls

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