Voltamp Transformer: A solid bet on long side - tgt 2300
# Voltamp Transformer a well run, cash rich, consistently dividend paying company has done an EPS of 110/- for FY21, a growth of > 25% in a pandemic year (89/- in FY-20).
# Cumulatively the company has earned a net profit of 431 crores from FY-17 to FY-21. Over FY-17 EPS the company reported 50% increase in Net profit in FY-21
# A conservative estimation of 50% more cumulative profit from FY-22 to FY-26, Voltamp transformers is expected to make at least 650 crores in next 5 years with potential for upside.
# With current cash equivalents & investment of more than 650/- per share, the Company will essentially be free in FY-26 for the investors who are able to invest at current levels of 1400 to 1500
# As far as current valuation is concerned, it will not be a surprise if the stock gets re-rated to 2300 levels based on the following logic:
* Since the company is a consistent dividend payer and holds a large amount of cash which protects it from payment issues, working capital issues, cycles etc, its current year earnings should get a multiple of at least 15 times which takes the earnings based value for the company to 1650/- plus the value of cash equivalents (cash+ inventory+ receivable - paybles) & investmnets of 650/- per share. so the total value comes to 2300 levels
# Technically also there is a multi year high range break out on monthly chart with higher volumes. This makes it even more convincing to me that the stock is poised to give very good return in next few months.
# Cumulatively the company has earned a net profit of 431 crores from FY-17 to FY-21. Over FY-17 EPS the company reported 50% increase in Net profit in FY-21
# A conservative estimation of 50% more cumulative profit from FY-22 to FY-26, Voltamp transformers is expected to make at least 650 crores in next 5 years with potential for upside.
# With current cash equivalents & investment of more than 650/- per share, the Company will essentially be free in FY-26 for the investors who are able to invest at current levels of 1400 to 1500
# As far as current valuation is concerned, it will not be a surprise if the stock gets re-rated to 2300 levels based on the following logic:
* Since the company is a consistent dividend payer and holds a large amount of cash which protects it from payment issues, working capital issues, cycles etc, its current year earnings should get a multiple of at least 15 times which takes the earnings based value for the company to 1650/- plus the value of cash equivalents (cash+ inventory+ receivable - paybles) & investmnets of 650/- per share. so the total value comes to 2300 levels
# Technically also there is a multi year high range break out on monthly chart with higher volumes. This makes it even more convincing to me that the stock is poised to give very good return in next few months.