Initiating Coverage

Voltamp
5 October 2009

Overweight
Market Data Bloomberg code Sensex Price Target Price Target return Equity shares o/s (mn) Market Cap ($ mn) 52 Wk H/L FII Limit Stock performance (%) 1 Month 6 Months 12 Months Absolute
(0.9) 149.5 40.0

TRANSFORMING TO A BIGGER SCALE

Voltamp was set up in 1963. Companys recent foray into 220 kV, from the existing 132 kV will augur well for future growth. Further development to 400 kV shall be a key technological advancement.

Capacity enhancement to lend growth in new business areas:

Voltamp has recently increased its capacity from 9,000 to 13,000 MVA in line with its foray into 220 kV (100 MVA) class transformers. In the first two years of the 11th plan ~ 183,000 MVA capacities have been added in the 200 kV class, surpassing the 10th plan by ~17% (156,500 MVA). New capacity addition coupled with significant replacement demand (from 6th and 7th plan) will drive up volumes for all players including Voltamp especially in the 220 kV class.

VAMP IN 17,134 Rs 816 Rs 940 15% 10.1 173 917 / 263 24%

Relative
(12.5) 36.0 1.6

Zero Debt: Voltamp is a zero debt company with net debt to

equity at -0.5 offering significant scope to venture into new working capital intensive but high revenue generating activities. (Cash and cash equivalent Rs 140 per share in FY09).

Shareholding pattern

Margins and return ratios to recover in FY11: We expect EBITDA

margins to correct to ~17% (FY09 23%) in FY10 and recover to 19% in FY11 on account of dip in commodity prices and lesser hedging gains. Sharp dip in profits expected in FY10 coupled with significant capex for new plant will lead to a sharp drop in ROE and ROCE for FY10, with recovery expected only in FY11 led by incremental volumes from new plant and better realisation.
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Nov-06 Jan-07

Sensex Relative chart

Voltamp Sensex

Valuation & Recommendation: At CMP of Rs 815 stock trades at

10x FY10E and 7x FY11E EPS of Rs 81.8 and Rs 116.3 respectively. We initiate coverage with an Overweight rating on the stock with a target price of Rs 940 (See page 7 for Valuation).

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Key financial highlights

Year end 31 Mar (Rs mn) Net Sales EBITDA PAT EPS (Rs) PE (x) EV/EBITDA (x) P/BV (x) EBITDA % PAT % ROE % ROCE% FY08 5,553 1,179 799 79.0 10.3 6.5 5.0 21.2 14.4 60.5 94.3 FY09 6,431 1,498 1,132 111.9 7.3 4.6 3.1 23.3 17.6 52.9 79.0 FY10E 6,084 1,023 828 81.8 10.0 6.1 2.5 16.8 13.6 27.8 41.7 FY11E 7,785 1,533 1,177 116.3 7.0 3.6 1.9 19.7 15.1 30.8 46.1 CAGR (08-11E) 11.9 9.2 13.8 13.8 -

Vinay Pandit +91-22-4333 5115 Jason Soans

vinaypandit@ifinltd.in jasonsoans@ifinltd.in

Refer to disclaimer, analyst certification and ratings criteria on the last page prior to making any investment decision.

Sep-09

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Contents: Key Investment Criteria Key Assumptions Sensitivity Analysis Valuation Peer comparison What to expect in 2QFY10? Business Background I-Fin Estimates Cash Flow & Balance Sheet I-Fin Estimates Income Statement and Key Ratios Disclaimer / Analyst Certification / Key Ratings

Page 3 6 6 7 8 8 9 10 11 12

5 October 2009

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Key Investment Criteria

Voltamp Transformers is a key player in the sub 100 MVA (220 kV) capacity transformers. The company not only sells to external customers such as industries and State Electricity Boards, but also sells to its competitors such as ABB, Siemens, etc who prefer outsourcing custom designed small transformers. Moving from 50 MVA to 100 MVA (220 kV); Capacity increase from 9,000 to 13,000 MVA Until FY09, Voltamp has focused on the sub 50 MVA (132 kV) transformer capabilities. However, with the new additional 4,000 MVA facility operational from Sep 09, the company has now extended their capabilities from 50 to 100 MVA (220 kV).

Until the company was operating in the 50 MVA (132 kV) class the market opportunity for the company was limited in size and quantity to smaller installation. Also, company had significant share of business from different customers which was depicted by the fact that no single customer had more than 10% of revenue share. However, with the company now moving into the 100 MVA (220 kV) class, a new market has opened up for the company. The potential growth in this class segment can be shown as under:
Substation Transformer addition (MVA) in 220 kV At the end of Central State Total 500 37,291 6th plan 36,791 7th plan 8th plan 9th plan 10th plan 11th plan (Up to Mar09) 1,881 2,566 2,866 4,276 4,476 51,861 81,611 113,497 152,221 176,879 53,742 84,177 116,363 156,497 182,455*

Source: Ministry of Power; * - incl. 800 MVA under JV/Pvt

Source: IFIN Research; Company

Company continues to witness competition in this space from players like Emco, Indotech, Accurate, Alfa, IMP Power, Bharat Bijlee and Transformer & Rectifiers. Larger players like Crompton Greaves, Areva T&D, ABB and BHEL continue to maintain their niche in the larger transformer such as 765 kV and above up to 1200 kV
Company ABB Siemens Areva T&D BHEL Cr.Greaves Emco Ltd Tr.& Rectifier Bharat Bijlee Indotech Voltamp Transformer up to 1200 kV 1200 kV 1200 kV 800 kV 800 kV 400 kV 400 kV 220 kV 400 kV 132 kV Upgrading to 1200 kV 1200 kV 765 kV 220 kV Capacity (MVA) 16,875 15,000 15,000 35,366 24,670 20,000 23,000 11,000 7,450 13,000

Source: IFIN Research; Company

The 220 kV class has witnessed growth in the first 2 years of the 11th Plan (2007-2012), already beating the total MVA addition at Substations in the 10th Plan (2002-2007). The total planned addition for the 11th Plan (2007-2012) under all classes stands at 160,000 MVA per annum. Of the total 306,892 MVA of transformer capacity added at substation level until March 2009, 58% lies in the 220 kV range. At nearly Rs 0.5 mn per MVA this indicates total investment of ~Rs 88 bn up to 31 March 2009 in the 220 kV range alone. We believe that in the balance period of the 11th plan, significant demand in the 220 kV class can be expected on account of the following: 1. Continued power capex: 7MVA of transformer capacity for every 1 MW power generated. 2. Replacement demand of old transformers to an extent of ~ Rs 45 bn over the 11th plan. This will enable players like Voltamp to move faster to the 100% capacity utilisation scenario. The average replacement cycle of a transformer is ~25-30 years. Hence transformers installed in the 6th and 7th Plans up to ~90,000 MVA are in the process of being replaced over the 11th and the 12th Plan.

5 October 2009

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Power transformers lead the way; SEB revives Voltamps business primarily comprises of distribution transformers (up to 5 MVA), power transformers (5 MVA and above) and dry type transformers (up to 12 MVA). Power transformers contributed to 58.4% of total MVA sold in FY09. In value terms the same contributed 48% to revenue.

Source: Company; IFIN Research

o 300 MVA was added at Central Govt level. o 4166 MVA was added at State Govt level. o 800 MVA was added in JVs / Private sector. During 1QFY10, Voltamp executed 1,590 MVA worth of transformers which were however primarily in the 50 MVA (132 kV) class since the new capacity was expected to be operational only by Sep 09. With the new facility now in place, company is extending its range up to 200 kV transformers targeting the growing SEB business. In the current business scenario where private sector orders are slowing down, we expect the company to deliver ~10,200 MVA worth of orders during FY10. However, working capital cycles could marginally increase on account of the SEB business, which have a history of slower payment cycles.

The company has also increased its capabilities in power transformers from 50 MVA (132 kV) to 100 MVA (220 kV). The growth in this business segment is also being propelled by the companys renewed focus on bidding for orders of State Electricity Boards (SEBs) which contributed to 8% of revenue in FY09 (3.75% in FY08, 2-3% in FY07). In FY10, we expect the SEB business to increase to ~12-14% and further increase to 15% and above in FY11.

Source: IFIN Research; Company

Source: Company

Hence Voltamp is estimated to participate in the large chunk of orders estimated in this class over the next 2-3 years (2010-2012) of the 11th Plan (2007-2012). Various players are adding up capacities to cater to this requirement. Between Apr-Aug 09, 8,101 MVA was added at various substations in the 220 kV class of transformers. 5 October 2009

Revenue growth driven by volume and raw material prices; Order book set to grow Voltamp has a pending order book of Rs 4.75 bn as of Jun 09 which is an increase of 16.6% over closing order book of Rs 4.07 bn as of Mar 09. Post that company has received a large order of Rs 800 mn from MSEB (Maharashtra State Electricity Board). The total order book is executable by Mar-Apr 09. In spite of a severe slowdown in various projects, the company has been able to deliver volume growth of 21% in FY09. However, due to capacity constraint, new capacity gradually coming into place and bleak business environment, we expect volume growth of 10% in FY10 and 14% in FY11. However, large order inflows on account of entry into 220 kV class will help reach optimum capacity utilisation of 13,000 MVA faster, and will lead to upsides to our earnings estimates.

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Coupled with this is the drop in price of copper which was an average of ~USD 6,000 per tonne in FY09 (1HFY09 USD 8,072 per tonne). For FY10, we have estimated average price of copper at ~USD 5,300 per tonne which will in effect pull down average realisation for the company (for oil filled transformers) from Rs 0.61 mn per MVA in FY09 to Rs 0.53 mn per MVA in FY10. For FY11 our current estimates factor in copper prices at ~USD 6,000 per tonne which would indicate an average realisation of 0.58 mn per MVA.

Source: IFIN Research

Copper alone forms 33% of raw material cost. Raw material cost forms ~70% of sales. Any change in average copper prices will change our estimates for the respective years. On a YoY basis, we expect a significant dip in revenues in 2QFY10 on account of dip in average realisation led by a sharp dip in copper prices. In 2QFY09, copper traded at an average of USD 7,684 per tonne while in 2QFY10, the average price of copper is ~USD 5,834 per tonne, a dip of 24% YoY.

prevalent of that day at the LME (London Metal Exchange). The company books back to back purchase orders of raw materials while taking a hedge on the LME. However, this may at times offer a good opportunity for the company to make better than expected margins are seen in 3QFY09 (as seen in the above graph) where the EBITDA margins moved up to ~30% vis-a-vis the fall in copper prices to ~USD 4,000 per tonne from an average USD 7,684 per tonne in 2QFY09. While hedging prevents the downside for the company, in times like these it offers an opportunity to make exceptional margins on certain orders. Strong Balance Sheet; Healthy cash flows; To witness marginal strain on working capital with new capacities and growth in SEB business Post FY06, when company started scaling up capacities significantly to capitalise on the boom in the economy thereby leading to a sharp rise in demand for transformers by all classes of industries, their cash flows had turned positive at operating level. In fact, within the same plant the company, which was manufacturing 3500 MVA in FY03, and 4500 MVA in FY05 had scaled up to manufacture 7,200 MVA in FY08 and 9,000 MVA in FY09. This has helped the company to derive maximum benefit of operating leverage thereby leading to sharp rise in operating cash flows and EBITDA margins. At this point of time, SEB business was also barely 3-4% of the total turnover hence causing lesser strain on the cash flows.
Volume (MVA) FY03 FY04 FY05 FY06 FY07 FY08 2,403 3,650 4,462 4,503 6,188 7,898 9,541 10,000 11,000 CFFO (Rs Mn) (3) 69 (88) (15) 553 455 1,043 687 750 FCF (Rs Mn) (71) 59 (118) (39) 267 49 163 246 153 EBITDA (%) 9.8% 14.0% 13.5% 13.6% 15.2% 21.2% 23.3% 16.8% 19.7%

Source: IFIN Research; Company; Bloomberg

FY09 FY10E FY11E

Robust hedging policies in place Voltamp has strong hedging policies in place. The typical approach when booking any order involves booking the order plus the price of copper 5 October 2009

CFFO: Cash Flow From Operation; FCF: Free Cash Flow Source: Company, IFIN Research

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Key assumptions
Key Assumptions Volume (MVA) Growth % YoY Realisation (Rs mn/MVA)-Oil filled Growth % YoY Realisation (Rs mn/MVA)-Total Growth % YoY Copper - Avg price (USD / Tonne) Growth % YoY Revenue mix (%) Distribution Transformer Power Transformer Dry Type Transformer 30.4 58.4 11.2 30.0 60.0 10.0 28.0 61.0 11.0 FY09 9,541 20.8 0.61 (3.5) 0.67 (3.6) 5,893 (22.5) FY10E 10,500 10.1 0.53 (13.0) 0.58 (14.0) 5,300 (10.1) FY11E 12,000 14.3 0.58 10.5 0.65 12.0 6,000 13.2 Comments SEBs share to increase in FY10 to 12% and FY11 to 15% Expect dip in realisation in line with fall in copper prices which were at life time highs in FY09. Competitive bidding in SEB business will pull down margins. 1HFY09: $ 8072/ton; 2HFY09: $ 3702/ton 1HFY10: $ 5264/ton; 2HFY10E:$ 5400/ton SEBs business expected to contribute larger share in 220 kV space hence improvement in share of Power Trf. Dry type to stay low in line with lower real estate activity.

Sensitivity Analysis
Voltamp revenue is highly sensitive to copper which contributes nearly 33% to the raw material cost. Other key raw material CRGO (laminate) which contributes 37% to raw material cost is not as volatile as copper and has seen better stability in pricing (approx. Rs 200 per kg +/- Rs 10-20) over the past 12 months.

Sensitivity analysis : Copper

Avg Copper Price (USD/ton) Avg Realisation - oil filled (Rs mn/MVA) Revenue (Rs mn)

Bear 5,000 0.50 5,740 Bear 10,000 5,794 15.8% 74.7

FY10E Base 5,300 0.53 6,084 FY10E Base 10,500 6,084 16.8% 81.8

Bull 6,000 0.60 6,888 Bull 11,000 6,374 17.7% 89.0

Bear 5,800 0.57 7,525 Bear 11,500 7,460 19.2% 109.9

FY11E Base 6,000 0.58 7,785 FY11E Base 12,000 7,785 19.7% 116.3

Bull 6,500 0.63 8,433 Bull 13,000 8,433 20.8% 130.7

Sensitivity analysis : Volume

Volume (MVA) Revenue (Rs mn) EBITDA (%) EPS (Rs) Sensitivity to revenue mix: FY10E Distribution transformers Power transformers Dry type transformers Revenue (Rs mn) Avg. Realisation (Total)(Rs mn/MVA) EBITDA % EPS (Rs) FY11E Distribution transformers Power transformers Dry type transformers Revenue (Rs mn) Avg. Realisation (Total)(Rs mn/MVA) EBITDA % EPS (Rs)

1 26% 64% 10% 6,019 0.573 16.6 80.2 1 24% 65% 11% 7,719 0.643 19.5 114.7

2 28% 62% 10% 6,052 0.576 16.7 81.0 2 26% 63% 11% 7,752 0.646 19.6 115.5

Base 30% 60% 10% 6,084 0.579 16.8 81.8 Base 28% 61% 11% 7,785 0.649 19.7 116.3

3 31% 58% 11% 6,158 0.586 17.1 83.6 3 30% 58% 12% 7,893 0.657 19.9 119.0

4 32% 54% 14% 6,348 0.604 17.7 88.3 4 32% 54% 14% 8,075 0.673 20.3 123.4

5 October 2009

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Valuations
Voltamp has traditionally traded in the 8x-12x band. The sharp break out beyond the 12x band was largely lead by the strong growth displayed by the company in volumes as well as rise in realisation due to the sharp rise in commodity prices. Since March 2008, the stock has returned below the 12x and moved further below the 8x level led by the sharp drop in commodity prices especially copper, coupled with expectation of slowdown in volume growth in FY10 led by capacity constraint. The company has now expanded capacity from 9,000 MVA to 13,000 MVA with the new plant. However, due to the bleak economic outlook, orders have slowed down from private customers. This has led to company focusing on SEB orders and thereby increasing capacities to cater to the demand in the 220 kV class (100 MVA). We expect Voltamp to not trade beyond the 10-12x bands on account of the following factors: 1. Lower volume growth expected in FY10 (10%) and FY11 (14%) against 21% in FY09. 2. Slower order inflows from private customers due to ensuing economic scenario. 3. Dip in margin expected in coming years. 4. Drop in average copper prices pulling down average realisations in spite of volume growth, therefore leading to overall dip in revenue. 5. Working capital strain to increase with growth in SEB business.

Introducing the EV/MVA method of valuation

We hereby introduce the EV/MVA method of valuing pure transformer players since revenues are a combination of volume growth + realisation. Realisation is also determined by prevailing price of key raw materials such as copper, CRGO, transformer oil. In typical scenarios as seen in FY09 and FY10 a sharp rise and subsequent sharp fall in commodity prices primarily copper and crude oil altered the revenues of the company, in spite of growth in volume (MVA). Hence we decided to arrive at the valuations using the EV/MVA method.

EV/MVA analysis Since Sep 06 Peak Median Average Peak Median Average 1.9x 0.8x 0.8x 0.7x 0.3x 0.3x

Last one year

Based on the data above, we value Voltamp on the EV/MVA method. On giving it an average one year forward EV/MVA of 0.6x we arrive at a target price of Rs 950 per share.

Valuation and Recommendation

On a PER(x) basis we arrive at a target price of Rs 930 per share based on 8x FY11E EPS of Rs 116.3. On averaging the price target based on EV/MVA and based on PE(x) we arrive at a target price of Rs 940.

Cash per share

The company has cash & cash equivalents of Rs 140 per share as of March 2009.

We recommend an OVERWEIGHT rating on the stock with an upside potential of 15% from the current levels.

5 October 2009

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Peer comparison
PE (x) based comparison
Company VOLTAMP Immediate peers: Emco* Transformer & Rectifier* Bharat Bijlee* Larger Peers: ABB India* Crompton & Greaves*# Areva T&D* 790 322 319 69,464 46,106 26,551 65,528 83,173 52,790 61,912 34,438 42,884 13.0% 14.0% 15.0% 11.4% 12.8% 15.1% 11.5% 13.2% 15.6% 8.0% 9.0% 9.0% 6.9% 8.1% 7.5% 7.1% 8.4% 7.4% 25.8 10.8 9.5 21.3 11.6 11.1 28.0 14.2 13.2 30.6 29.7 33.6 37.1 27.7 28.7 28.2 22.7 24.1 94 383 1016 9,963 4,310 5,459 11,405 13,656 4,298 5,827 5,750 7,011 14.0% 16.0% 15.0% 12.6% 14.5% 15.6% 12.5% 15.1% 15.9% 5.0% 10.0% 9.0% 4.4% 9.1% 9.2% 4.5% 9.5% 9.4% 9.0 34.1 84.1 8.5 30.4 10.3 42.4 10.4 11.2 12.1 11.0 12.6 10.7 9.1 9.0 8.7 CMP (Rs) 815 Revenue (Rs mn) FY09 6,431 FY10E 6,084 FY11E 7,785 EBITDA (%) FY09 23.3% FY10E 16.8% FY11E 19.7% FY09 17.6% PAT (%) FY10E 13.6% FY11E 15.1% FY09 111.9 EPS (Rs) 81.8 116.3 7.3 PE (x) 10.0 7.0 FY10E FY11E FY09 FY10E FY11E

94.5 117.2

* - Bloomberg and Other estimates; # - Crompton Greaves numbers are standalone

EV / MVA (x) based comparison with immediate peers

Company VOLTAMP Emco Ltd* Transformer & Rectifier* Bharat Bijlee* CMP (Rs) 815 94 383 1016
O/s shares

Mkt Cap (Rs mn) 8,248 5,527 4,941 5,791

Net Debt (Rs mn) FY09 FY10E FY11E -1,399 -1,992 -2,698 2,153 -381 -56 1,516 -271 -70 1,979 -141 -92

Enterprise Value (Rs mn) FY09 6,849 7,680 4,560 5,735 FY10E 6,256 7,043 4,670 5,721 FY11E 5,550 4,800 5,699

Production (MVA) FY09 FY10E FY11E 9,451 10,500 12,000 7,000 7,589 9,000 11,000 8,500 9,500

EV / MVA (x) FY09 FY10E FY11E 0.7 0.7 0.7 0.8 0.6 0.6 0.5 0.7 0.5 0.5 0.4 0.6

(mn) 10.1 58.8 12.9 5.7

7,506 10,947 12,000 14,000

* - Bloomberg and Other estimates;

What to expect in 2QFY10?

On the volume front we expect marginal improvement QoQ against 1,590 MVA executed in Q1FY10 and YoY over 1QFY09 led by order from SEBs. Average Copper price is at USD 5,834 per tonne as of 2QFY10 vis-a-vis USD 7,684 per tonne as of 2QFY09, a dip of 24% YoY. Together, both the above factors could lead to a ~20% YoY dip in revenue for 2QFY10. Against this, average copper price for 3QFY09 was USD 3,943 per tonne which is much lower than current prevalent prices. We are assuming an average copper price of USD 5300 per tonne for the whole year FY10. Hence 2QFY10 could be the last point in the current commodity cycle where one would see a dip in revenue on account of the same, offering a good entry point for various investors. We believe the chances of under-performing to previous quarters would end with 2QFY10, subject to no similar knee jerk correction in commodities as seen in FY09. Margins too are expected to bottom out. However, increasing competitive bidding in 220 kV SEB business will keep margin suppressed vis-a-vis highs as seen in previous years.

Our view
Voltamps stock price could take a beating in the short term in the run up to the 2QFY10 results. However, we look at it as a good investment opportunity to invest for the medium to long term in the stock led by a boost in volumes and revenue on account of new businesses and capacity augmentation. 5 October 2009
8

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Business Background
Background
Voltamp was originally set up as a partnership firm by the name of Voltamp Corporation by the promoter Mr Lalitkumar Patel and others. Prior to starting his own firm, Mr Patel had worked for 8 years with Siemens, Germany and 3 years with Bharat Bijlee, India. The partnership firm was then converted into a private limited company in 1967. Voltamp got listed as a public company in Aug 2006 through the divestment of equity stake to the public to the tune of 4.88 mn shares . The company did not receive any proceeds from the listing process. from Sep 09 onwards. However, it will take 2-3 years to reach optimum capacity utilisation levels. We expect Voltamp to do ~10,500 MVA of sales during FY10. By FY 11-12, we expect company to reach the expanded capacity of 13,000 MVA.

Management
The day to day affairs of the company are managed by Jt MD, CFO and CEO Mr Kanubhai S Patel. In the past he has worked with Atul Products, Bombay Dyeing and Cadbury India Ltd. He was been with the company for almost 30 years. The other Joint MD and Vice Chairman is Mr Kunjalbhai L Patel who is an electrical engineer with 11 years of experience in production, marketing and general management.

Business
Products: Voltamp is in the business of manufacturing transformers. The company categorises their business into 3 parts: 1. Distribution transformers (30%): these are oil filled transformers up to 5 MVA range. 2. Power transformers (58%): these are oil filled transformers from 5 MVA to 100 MVA range (220 KVA). 3. Dry type transformers (12%): these are dry (non oil) type transformers up to 12.5 MVA range. Production capacity:

Manufacturing capacities
The company has 1 plant at Makarpura, Vadodara with installed capacity of 9,000 MVA. It has recently set up a new plant of additional 4,000 MVA at Savali, Vadodara (Gujarat). The new plant is operational from Sep 09 and will take the total manufacturing capacity to 13,000 MVA per annum. The company can always, as seen in FY09, outsource low value add activity at secondary rented sites to improve the productivity of the plants. These ancillary activities would typically comprise of painting, assembly, tools, small machining, etc.

Key Customers
The company primarily has two kinds of customers: 1. State Electricity Boards: ~9 % of the turnover 2. Industrial clients: ~91% of the turnover The company has, in the past always had a preference for industrial clients anticipating better payments terms and conditions. On the other hand SEBs are slower in realising payments. However, going by the current economic scenario we expect the share of SEBs business to increase in FY10 and FY11. In FY10, the share of SEBs to total turnover is expected to increase to ~12% against 9% in FY09 and further to 14-15% in FY11.

Source: IFIN Research; Company

The company has enhanced their capacity from 9,000 MVA to 13,000 MVA at a sum of Rs 270 mn. The new capacity is expected to be operational

5 October 2009

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Financial Statements
Income Statement (Rs mn)
Year end 31 March Net Sales Expenditure Operating Profit Other Operating Income EBITDA Other Income Depreciation EBIT Interest PBT (before non-recurring) Non Recurring Tax on non recurring PBT (after non-recurring) Total Tax Reported PAT Adjusted PAT Prior period items Minority interest Preference dividend Net Income 1,250 451 799 799 799 FY08 36.9 90.6 100.6 21.2 22.6 22.5 14.4 79.0 100.6 10.3 9.9 5.0 1.4 6.5 60.5 14.4 2.6 1.6 94.3 -0.4 18.5 FY08 5,553 4,375 1,179 1,179 108 31 1,255 5 1,250 1,689 557 1,132 1,132 1,132 FY09 15.8 27.1 41.7 23.3 26.3 26.3 17.6 111.9 41.7 7.3 7.0 3.1 1.1 4.6 52.9 17.6 2.2 1.4 79.0 -0.5 13.1 FY09 6,431 4,932 1,498 1,498 240 45 1,694 5 1,689 1,235 408 828 828 828 FY10E -5.4 -31.8 -26.9 16.8 20.4 20.3 13.6 81.8 -26.9 10.0 9.4 2.5 1.0 6.1 27.8 13.6 1.7 1.2 41.7 -0.6 17.2 FY10E 6,084 5,061 1,023 1,023 270 52 1,240 5 1,235 1,757 580 1,177 1,177 1,177 FY11E 28.0 49.9 42.2 19.7 22.6 22.6 15.1 116.3 42.2 7.0 6.7 1.9 0.7 3.6 30.8 15.1 1.7 1.2 46.1 -0.6 15.1 FY11E 7,785 6,251 1,533 1,533 283 54 1,762 5 1,757

Key ratios
Year end 31 March Growth rates (%) Net sales EBITDA APAT Margins (%) EBITDA EBIT PBT APAT Valuation ratios (x) EPS (Rs) EPS Growth (%) PER (x) Price / Cash EPS (PCEPS) (x) Price /Book Value (P/BV) (x) EV/Net Sales (x) EV/EBITDA (x) DuPont ROE (%) Net Margin (%) Asset Turnover (x) Leverage (x) Other key ratios ROCE (%) Net Debt / Equity (x) Dividend Payout (%)

5 October 2009

10

IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Cash Flow Statement (Rs mn)

Year end 31 March Oper.profit before w.cap. changes Change in current assets Change in current liabilities Others activities Cash flow from operation (a) Capital expenditure Investments Dividend received Interest received Others Cash flow from investing (b) Free cash Flow (a+b) Equity capital + share premium Debt Interest paid Dividend paid Others Cash flow from financing (c) Net change in cash (a+b+c) Cash and equivalents at the end (98) (49) 46 FY08 101 1,545 1,647 10 10 139 755 2,551 194 581 46 807 826 94 1,773 3 2,551 1,657 879 1,647 833 (406) 49 1 (5) (95) (163) 0 46 FY09 101 2,531 2,632 24 675 3,331 324 1,353 46 523 1,019 63 1,650 5 3,331 2,632 951 2,632 905 FY08 1,244 (483) 119 (425) 455 (99) (349) 38 4 FY09 1,673 123 (222) (531) 1,043 (173) (771) 51 14 (880) 163 (10) (5) (148) (153) 93 139 FY10E 101 3,216 3,318 22 646 3,986 303 1,853 139 504 1,087 100 1,831 3,986 3,318 1,162 3,318 1,023 FY10E 1,203 (88) (17) (411) 687 (31) (500) 80 10 (441) 246 (5) (148) (147) 6 146 FY11E 101 4,216 4,317 36 623 4,976 238 2,553 146 703 1,187 150 2,186 4,977 4,317 1,527 4,317 1,381 FY11E 1,723 (349) (15) (610) 750 10 (700) 80 13 (597) 153 (5) (142)

Balance Sheet (Rs mn)

Year end 31 March Share Capital Reserves & Surplus Shareholder's funds Short term debt Long term debt Total Debt Creditors Other current liab & provn Other non-current liabilities Total Liabilities F.Assets (net) incl. Cap WIP Investments Cash & Bank Inventory Debtors Other current assets Total current assets Other non-current assets Total Assets Capital Employed Net Current Assets Book Value ( Net Worth ) Working Capital

Key Balance Sheet parameters (Rs mn)

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IFIN Research
IFCI Financial Services

Voltamp Transformers
Overweight

Disclaimer:

I-Fin Disclaimer: All information/opinion contained/expressed herein above by I-Fin has been based upon information available to the public and the sources, we believe, to be reliable, but we do not make any representation or warranty as to its accuracy, completeness or correctness. Neither I-Fin nor any of its employees shall be in any way responsible for the contents. Opinions expressed are subject to change without notice. This document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. This document is for the information of the addressees only and is not to be taken in substitution for the exercise of judgement by the addressees. All information contained herein above must be construed solely as statements of opinion of I-Fin at a particular point of time based on the information as mentioned above and I-Fin shall not be liable for any losses incurred by users from any use of this publication or its contents. Analyst declaration I, Vinay Pandit, hereby certify that the views expressed in this report are purely my views taken in an unbiased manner out of information available to the public and believing it to be reliable. No part of my compensation is or was or in future will be linked to specific view/s or recommendation(s) expressed by me in this research report. All the views expressed herewith are my personal views on all the aspects covered in this report. I-Fin Investment Rating The ratings below have been prescribed on a potential returns basis with a timeline of up to 12 months. At times, the same may fall out of the price range due to market price movements and/or volatility in the short term. The same shall be reviewed from time to time by I-Fin. The addressee(s) decision to buy or sell a security should be based upon his/her personal investment objectives and should be made only after evaluating the stocks expected performance and associated risks. Key ratings: BUY (B): OVERWEIGHT (OW): NEUTRAL (N): UNDERWEIGHT (UW): SELL (S): NOT RATED (NR):

Stock offers returns upside of > 20% Stock offers returns upside of 5% to +20% Stock offers returns of -5% to +5% Stock offers returns downside of -5% to -20 % Stock offers returns downside of < (20) % Coverage not initiated / Not enough assurance to give a rating for varied reasons

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