From Rs 800 to 8,000! This multibagger stock has more legs to rally; may hit Rs 10000 mark

Nuvama Institutional Equities has initiated coverage on Voltamp Transformers (VAMP) with a 'BUY' rating and set a target price of Rs 10,200, applying a 25 time multiple to the FY28E EPS estimate of Rs 406.8. The current market price reflects 22x/20x FY27E/28E price-earnings, suggesting valuation upside as the company's expansion strategy unfolds. 

Nuvama highlights Voltamp’s anticipated 13–15% EPS growth for FY27E, attributed to an expected 18% year-on-year revenue increase as total transformer capacity rises to 20,000MVA from the current 14,000MVA. Projections for FY26E–28E indicate a CAGR of 14% in operating income, 17% in revenue, and 13% in EPS, while the operating profit margin is expected to moderate to approximately 17% by FY28E due to pricing pressures, consistent with broader consensus.

The company’s business model is built on short execution cycles and a diversified approach, avoiding large tender-driven projects. Over the past two decades, Voltamp has broadened its customer base to over 3,000 clients across more than 20 industries, substantially reducing client concentration risks.

Voltamp currently operates its 14,000MVA capacity at over 100% capacity utilisation, reflecting robust market demand and effective capital management. The company reports a cash conversion cycle ranging from three weeks to six months.

Shares of Voltamp Transformers remained range-bound on Wednesday, between Rs 7,833.20 to Rs 8,039.60, falling nearly 2.5% from day's high. Its total market capitalization slipped below Rs 8,000 during the day.

In a market with 150–200 competitors, Voltamp has established itself as a top private sector partner by prioritising orders with favourable working capital terms. It maintains best-in-class operating profit margins (17–18%), RoE of 18–20%, and has achieved a 50% EPS CAGR over the last five years. Voltamp commands a premium realisation of ~INR1.3mn/MVA (versus the industry average of ~INR1.0mn/MVA), though peer catch-up is narrowing these premiums, reflected in falling margins.

A significant driver for future growth is the company’s investment of INR2bn, fully funded through internal accruals, to expand its Jarod (Vadodara) facility by an additional 6,000MVA. The new plant is expected to lift total installed capacity to 20,000MVA and come on stream by Q1FY27E, ramping up to 60% CUF by FY27E and to full capacity thereafter.

Nuvama’s report notes that Voltamp is trading at a discount to peers, with a FY28E P/E of 20x versus the 30–40x range common in the sector. With a 13% EPS CAGR and ~19% RoE over FY26E–28E, and revenue/PAT CAGR of 17%/13%, Voltamp is seen as well positioned to outperform other private-capex-linked names.

Key variables for Voltamp in the coming years include timely commissioning of the Jarod facility to reach 20,000MVA by Q1FY27E, sustaining operating profit margins (18.9% in FY25 and 18.3% in H1FY26), and maintaining realisations at approximately INR1.3mn/MVA as reported for H1FY26.

Voltamp Transformers have surged nearly 10x from its covid-19 lows around Rs 800. However, the stock corrected more than 31 per cent from its 52-week high at Rs 11,539.15 from hit in December 2024. However, the stock is up over 38 per cent from its 52-week lows at Rs 5,900 hi in April 2025.

Among other brokerage firms, PL Capital remains positive on VAMP considering its 1) strong market position in industrial transformers, 2) healthy demand momentum, 3) debt-free balance sheet, 4) consistent free cash flow generation, and 5) growing high-margin services business.

"Supply chain constraints in CRGO steel and a few other critical components along with geopolitical uncertainties remain key risk factors for execution going forward. We roll forward to September 2027E and maintain ‘buy’ rating valuing the stock at a PE of 26x September 2027E with a target price of Rs 10,318 (Rs 10,285 earlier)," it added.