Copyright © HT Digital Streams Limited All rights reserved. Voltamp Transformers plans to add 6,000 MVA by FY27. (Pixabay) Summary The company has enjoyed Ebitda margins of nearly 20% in recent years, but new capacity across the industry, including Voltamp’s own expansion, is set to take that down. Investors look for steady profitability. Shares in Voltamp Transformers Ltd have fallen nearly 30% over the past year, even as order inflows increase, capacity remains tight and customers across metals, automotive, renewables and data centers continue to place large orders. Investors seem to be trying to gauge how earnings will hold up once margins normalize. The transformer maker has spent the past few years in a sweet spot: demand has outstripped supply, supply chains have been stretched and critical inputs such as cold-rolled grain-oriented (CRGO) steel have been scarce. This pushed up prices and increased Ebitda margin to 19-20% in FY24-25, from 11-12% in FY21-22. Ebitda margin stood at 18.3% in H1FY26. Increased margin has driven much of the stock’s earlier rally. The question now is whether that margin cycle has peaked. Operating capacity is set to increase, and Voltamp itself plans to add 6,000 mega volt amps (MVA) by FY27, fully funded by internal accruals, taking total capacity to 20,000 MVA. As supply improves and lead times shorten, pricing power is likely to soften. Brokers expect Ebitda margin to decline by FY28. “While we expect high double-digit revenue growth led by capacity expansion and a lean balance sheet, we reduce our margin estimates due to rising operating supply from planned capacity additions by various players,” Emkay Research said. Even so, Voltamp’s order book of around ₹ 1,480 crore provides visibility. Revenue rose 10% YoY to ₹906 crore in H1FY26 on strong capex in private and public sector. In Q2FY26, the company manufactured and delivered its highest rated 160MVA/220kV transformer ahead of schedule, a marker of execution strength. Voltamp is debt free, generates steady free cash flow and benefits from a diversified customer base, broad industrial capital cycle, network expansion and increasing demand from renewable energy and data centers. A steady increase in its services business contributes to this comfort. With the margin cycle past its peak, investors can now seek clarity on Voltamp’s steady profitability. Nuvama Research sees operating margin narrowing to around 17% by FY28, in line with consensus, amid pricing pressure. It estimates order inflow, revenue and earnings-per-share CAGR at 14%, 17% and 13% over FY26-28. At around 22x FY27 estimated earnings, according to Bloomberg, the stock does not appear to be trading at a premium on increased margins. Investors hope Voltamp can turn its large order book into predictable, cash-generating growth. Still, supply chain challenges in CRGO steel and other critical components, along with geopolitical uncertainties, may pose incremental execution risks. Get all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download the Mint News app to get daily market updates. more topics #mark to maket #Voltamp Transformers Read next story