Voltamp Transformers Ltd, whose shares plunged 19 per cent on Tuesday, received a downgrade from Emkay Global. The domestic brokerage now has an 'ADD' rating on the stock against 'Buy' call earlier, as it cited a sharp run-up on the counter in the past few months. Even as Emkay Global raised its target price on the stock by 8 per cent to Rs 10,800 from Rs 10,000, the target suggests a mere 6 per cent upside over Thursday's closing price of Rs 10,168.  

Tuesday's steep fall on the counter came as the company reported pressure on margins in the March quarter, primarily driven by higher raw material costs. "This was largely attributable to rupee depreciation and the ongoing Middle East conflict, which significantly increased the cost of key inputs such as transformer oil. We expect things to normalise gradually," Emkay Global said.

On the growth front, said Emkay Global, Voltamp Transformers' 6,000MVA capacity expansion remains on track and is expected to be commissioned by July. Voltamp ended FY26 with an order book of about Rs 1,200 crore, up 28 per cent YoY. The management highlighted a strong enquiry pipeline, providing confidence on swift utilization of the incremental capacity, Emkay said.

"We remain positive on Voltamp Transformers, supported by its consistent execution track record and operational discipline. Expanding opportunities across renewables, EV charging infrastructure, green hydrogen, and data centers further broaden Voltamp’s addressable market and support its long-term growth outlook," Emkay Global said.

Despite Tuesday's fall, Voltamp Transformers shares are up 43 per cent in the past six months. The stock currently trades at 27 times anticipated FY27 earnings per share, offering limited upside from current levels, Emkay said. 

For the March quarter, revenue was flat YoY, impacted by supply-chain disruptions. Adjusted Ebitda margin declined 466 basis points (bps) YoY to 14 per cent, driven by a 384-bp contraction in gross margin along with higher other expenses, primarily due to elevated raw material costs due to rupee depreciation and the West Asia conflict. As a result, reported profit after tax declined 51 per cent YoY.

Emkay said given the strong demand and order inflow, Voltamp Transformers has been operating at its total current capacity of 14,000MVA. It is investing Rs 200 crore, funded via internal accruals, for adding 6,000MVA capacity in Vadodara, which is seen lifting its total installed capacity to 20,000MVA. 

"The plant is scheduled to come onstream by July and will ramp up capacity utilization to 50-60 per cent by FY27E, picking up pace thereafter. The Board of Directors of the company has approved investment of Rs 25 crore for the acquisition of a new plot of land near Vadodara, to keep the land bank ready for future use," it said.