Voltas Ltd. share price target

positive, however it needs considerable investment to scale up in highly competitive segment. We estimate 9% PAT CAGR over FY18-21. Retain Accumulate with a target price of Rs600 (28x DecFY21 EPS). Poor summer sales on high closing inventory remains a key risk and can de-rate the stock. Concall Takeaways: 1) RAC industry de-grew 4% in 9MFY19 on account of soft Diwali & poor summer season sales. 2) Current RAC inventory is 2 months, expect it to get normalized by end of Q4 3) Inverter ACs account for 40% of spilt AC sales, which are 80% of AC sales 4) 9MFY19 market share at 24% (200bps increase...

Voltas being a strong brand in the room air conditioner (RAC) segment has maintained its market leadership position in India despite rising competition and various macro level abruptions such as demonetization and GST implementation. Voltas' Unitary Cooling Products (UCP) segment contributes ~50% to sales and recorded ~12% CAGR in FY12-18. A strong brand coupled with over 6,500 dealers has helped increase its market share in ACs from 14% in FY10 to ~21% in FY18. Product mix has improved towards energy efficientinverter RAC segment as inverter AC currently...

Voltas being a strong brand in the room air conditioner (RAC) segment has maintained its market leadership position in India despite rising competition and various macro level abruptions such as demonetization and GST implementation. Voltas' Unitary Cooling Products (UCP) segment contributes ~50% to sales and recorded ~12% CAGR in FY12-18. A strong brand coupled with over 6,500 dealers has helped increase its market share in ACs from 14% in FY10 to ~21% in FY18. Product mix has improved towards energy efficientinverter RAC segment as inverter AC currently...

Voltas' 1HFY19 room air-conditioner (AC) sales saw muted growth of 6% as aresult of unseasonal rains and hailstorms across North and South India.Although, 3QFY19 sales witnessed a pick-up in the western region due to a rise in temperature, rest of India saw tepid sales given a seasonally weak quarter(3QFY18 was a very strong quarter for the UCP segment on inventory clearance done by VOLT as new Energy norms came into existence from Jan'18).

Voltas Ltd's Q2FY19 numbers were largely in line with our estimates. Consolidated net revenue growth stood healthy at 37.1% YoY, driven by strong performance from projects business ( 61.7%). Further, unitary cooling products segment reported decent growth of 8.2% after two quarters of muted performance. However, growth in EBITDA was relatively lower at 24.8%, while EBITDA margins contracted 76bps YoY to 7.6%, led by a sharp margin erosion of 616bps in unitary cooling products.

ICICI Securities Ltd | Retail Equity Research Voltas' topline growth of 37% YoY was largely driven by EMPS segment (contributes ~45% of total revenue) wherein segment revenue was up ~62% YoY owing to execution of domestic (led by electrification projects) and international orders. However, the UCP segment (contributes ~50% of total revenue) stayed underperformer with revenue growth of 8% YoY due to bad weather, unseasonal rains and weak Onam sales in Kerala (due to floods)...

We value based on SOTP, valuing EMPS/EPS/UCP at Sep-20 P/E at 17/20/35x with TP of Rs 640 (Rs 651 earlier). Voltas reported a mixed bag, with a beat in EMPS segment, market share gains in UCP but a sharp decline in UCP EBIT margins. Net revenues grew by 37% (exp. 10%) driven by robust execution in the project biz (trend prevalent across the capital goods sector). EBITDA/APAT grew by 25/9% (exp. of 12/6%).

6 November 2018 Sales grew 37% YoY to INR14.2b, above our estimate of INR11.9b, led by better EMP sales (INR9.0b v/s our estimate of INR6.8b). EBITDA rose 27% YoY to INR1.1b (in-line), with the margin of 7.6% (-60bp YoY) missing our estimate of 9.2% due to weak UCP margins. PAT rose 8.5% YoY to INR1.0b, ahead of our estimate of INR930m, led by higher other income (INR461m v/s our estimate of INR290m) and a lower tax rate (23.2% v/s our estimate of 28.4%). UCP sales grew 8% YoY to INR4.

Q2 saw margins halve in the UCP even as it grapples with inventory. Strong execution in the projects business saved Q2 for Voltas. Q2 aside, we continue to like the long term AC story in Voltas. Further, there is incremental growth coming from its durables foray. We maintain our Buy...

imported from Thailand with the initial rollout of frost-free models; the company plans to launch smaller-sized direct-cooling models later. launched washing machines in different categories of 7-12kgs across range and 12-year motor warranty v/s 10-year industry norm All front-load, fully-automatic machines come with inverter motors for power which has 15min/30min extra wash cycle and vents on top of the washing machine for better drying during monsoons A+++ rating for fully-automatic washing machinesthese are the top-of-the- line fully-automatic washers and are most energy efficient as per EU standards In our view, size of the washing tub is bigger than competition across Washer-cum-dryer models also being launched in top-end models. around 100 exclusive brand outlets and around 70% of its dealers (~16,000 touch points for Voltas) deal in other product categories and this network would be utilized by the JV.