Voltas Ltd. share price target

We maintain our Hold rating on the stock with a target price of Rs. 635 based on 29x FY21E adjusted EPS. Margins contract as costs increase Q1FY20 revenue was Rs. 2,647cr (up 24.0% YoY) against Rs. 2,134cr. for the same period last year. EBITDA margin declined 39bps YoY due to an increase in cost of sales (up 26.7% YoY), marginally offset by a decrease in employee benefit expenses (down 8.0% YoY). Reported PAT reduced 10.2% YoY to Rs. 165cr, as the VRS scheme...

Sustained market leadership in room AC segment and foray into other consumer durables segments continue to augur well for Voltas. At CMP, the stock trades at 30.6x of FY20E and 26.5x of FY21 earnings. Reducing our earnings estimate by 6%/3% for FY20E/FY21E, we reiterate our BUY recommendation on the stock with a revised Target Price of Rs663 (from Rs681...

Voltas's UCP segment revenue growth at 47% was much higher than domestic air conditioner industry growth of 36% during Q1FY20. With a slight gain in market share (~24% market share in Q1FY20) coupled with rising contribution of inverter AC into sales (Inverter AC contributes ~50% in AC sales) helped drive the UCP division performance in Q1FY20. The management guided for a strong demand recovery in the UCP division given the low base of last year, low channel inventory and strong order from EESL. On the EMPS front, the management guided for a revival in the business...

Voltas reported stellar Q1FY20 results (revenue/EBITDA/adj. PAT up 12%/18%/13% from estimate) driven by better-than-expected improvement in UCP segment.

Operating performance exceeds expectations: Consol. revenue increased 24% YoY in 1QFY20, exceeding our estimate by 11%, led by strong 47% growth in UCP segment. As a result of a higher effective tax rate (32% v/s our estimate of 27%) and higher losses in JVs, net profit increased at relatively low rate of 6% YoY to INR1.9b (in-line). Strong summer trumps consumption slowdown: According to management, industry growth stood at 36% for the quarter. Against the backdrop of slowing consumption in the economy, this validates that the...

Voltas remains confident of achieving annual margins of 11% in UCP segment Change in Estimates | Target | Reco led by 1) strong 1Q20 performance on the back of favourable summer season & delayed onset of monsoon 2) launch of new technology products in AC with...

Delivers in its best seasonal quarter; Maintain Buy In Q1FY20, Voltas reported results that were in-line with our expectations, adjusted for one-off. The results were driven by strong growth in the UCP division, which rose 47% YoY, due to a good summera fact corroborated by competitors and channel checks. While project business was down, we do not read too much into it and expect the business to remain steady on a full year basis. The company's balance sheet is improving with negative capital employed in the UCP segment, reversing the WC expansion seen in...

The electromechanical projects & services (EMPS) segment is likely to record flattish growth in the near term owing to bidding of quality orders. Voltas expect a significant rise in government expenditure on infrastructure (metros, airports), smart cities, cleaner water, healthcare and educational institutions that are expected to increase opportunities in the projects segment. Hence, it is likely to focus more on domestic projects compared to overseas. With order execution cycle of one to one and a half years, the current order book of ~ | 5000 crore indicates revenue visibility in the next...

UCP margins to stabilize at 11-12%, earmarks INR5b capex for new facility We met management of Voltas (VOLT) to understand the industry trends and the company's progress in its various segments and projects. Key takeaways: Room AC (RAC) industry witnesses a strong start to FY20: After remaining weak over the last two years, RAC industry demand picked up strongly in April/May this year, helping VOLT to normalize inventory in the system. Demand was strong across regions (north, south and west) over the last two...

Voltas (promoted by Tata Group) is a leading player in residential air-conditioners (RAC) in India.