Voltas Ltd. share price target

Voltas' strong performance in Q2FY18 was led by its unitary cooling product (UCP) segment which recorded sales growth of ~15% YoY during Q2FY18. This was largely led by re-stocking of inventory at dealers level post GST implementation. However, the performance of project business and EPS segment impacted by GST related issues. Despite intense competition, Voltas continues to be the market leader in the room air conditioner segment with a market share of 23% by the end of September 2017...

We maintain BUY, with a SOTP-based TP of Rs 622 (valuing EMPS/EPS/UCP at Sep-19 P/E of 10/20/35x). Voltas (VOLT) consolidated net revenue was up 7% YoY at Rs 10.4bn, lower than expectations, as EMPS registered slower growth. EBITDA and PAT grew by a robust 25% and 17% respectively. The UCP segment (40% of rev.) registered strong 15% growth, led by restocking. VOLT continued to gain market share, and achieved 23% vs. 22.2% in 1QFY18, 21.4% in FY17 and 21% in FY16.

Voltas held an analyst meet earlier today. Key takeaways: While there was massive destocking in Q1FY18 due to lack of clarity on deemed GST credit, sale in secondary trade channel was strong at 17% YoY.

We expect a revenue/PAT CAGR of 14% each over FY17-20E, based on which we arrive at a TP of Rs 619 We recently met the management of Voltas Limited (VOLT). Our discussion covered points like (1) Update on EMP projects in international and domestic markets, with potential improvement in the segment margin, (2) Pickup in inverter ACs, restocking post GST and the upcoming change in energy efficiency norms in the consumer AC segment and (3) Progress in the Arcelik JV w.r.t product launch timeline and management team.

We met with the management of Voltas and following were the key takeaways from the meeting: a) primary sales towards festive season (Diwali/Dussehra) was weaker than expectations, b) GST implementation led to 2% increase in effective tax rate, but company has not rolled out any price increase as 2Q/3Q are lean seasons, c) Voltas-Arcelik JV products to be launched by 4QFY18 (pushed from 3Q) and the plant is expected to be commissioned in 18 months after location is finalised, d) Voltas is No.4 player in inverter AC market (6% market share) as its focuses on the fixed speed AC segment given management's view that demand in that segment is still intact and e) projects division may see some near term...

Voltas indicated that Q1 A/C industry primary sales were marginally down YoY due to de-stocking, while secondary sales were up 15-17% YoY due to discounting and promotions ahead of GST transition.

ICICI Securities Ltd | Retail Equity Research Voltas' Q1FY18 consolidated revenues recorded growth of 6.1% YoY led by the strong performance of the EMPS segment owing to faster execution of domestic orders. However, the unitary cooling product (UCP) segment recorded a muted performance led by unseasonal rains and de-stocking at the dealer's level at the time of transition to GST. Despite intense competition, Voltas continues to be the market leader in the room air conditioner segment with a...

We reiterate BUY with a SOTP-based TP of Rs 601 (valuing EMPS/EPS/UCP at Jun-19 P/E of 10/20/35x). Voltas (VOLT) 1QFY18 revenues at Rs 19.4bn came in line with our expectations. Revenue/EBITDA/PAT grew by 5/6/17%. UCP segment was able to withstand the GST transition and registered 1% growth. Market share gain was heartening. EMPS segment margins improved (5.3%; +350bps YoY) with execution of high-margin projects. Order book grew by 11% to Rs 49.1bn.

Voltas has forayed into the wider consumer durables portfolio (Refrigerators, Washers, Microwaves) through its 50:50 JV with Turkey based Arcelik A.S. involving equity investment of Rs 6.8 bn.

Revenue increased by 70.14% to Rs. 1998.31 Cr in Q4FY17 when compared to the previous quarter