Voltas Ltd. share price target

8 Voltas' PAT was 25% below our estimate led by weakness in the ElectroMechanical Projects(EMP)segment.DespitestrongexecutioninEMP(Rs1.1bn,+56%yoy)led by acceleration to meet stringent deadlines the segment reported a loss as...

3QFY16 performance below estimates: Revenue up a strong 38% YoY to INR13.1b (estimate of INR11.5b) and EBIDTA up 2% YoY to INR583m (below estimate of INR707m). EBITDA margins were at 4.5%(-150bps YoY) and lower...

Voltas is a market leader in the domestic air conditioning space. The Unitary Cooling Products (UCP) division dealing in air conditioning products contributes dominantly to the companys overall revenues. The other two divisions are the Electro-Mechanical Projects (EMP) division and the Engineering Products Solutions division. Growth in Unitary Cooling Products segment to continue: Voltas has maintained 20%+ market share in the domestic air-conditioning (AC) market, despite stiff competition from MNC players. Its numero uno position is owing to its (1) wide distribution network (over 10,000 touch-points), (2) wide portfolio of 50+ models (new launches scheduled in 4QFY2016), (3) strong post-sale support (inc. 5-year warranty on compressor), and (4) strong advertising focus (Top 5 Media spender amongst AC players). With economic indicators turning favorable and summers ahead, the companys competitive positioning should help UCP segment to report 12.2% top-line and 10.0% EBIT CAGR, respectively, during FY2015-18E. Gradual recovery in the EMP business: Voltas EMP business is adversely affected due to the prevalent weak awarding environment, slow execution and cost over-runs. In run-up to Qatar World Cup 2022 and Dubai Expo 2020, we expect international awarding activity to gradually catch-up from FY2017E onwards. Surge in order book should translate to uptick in...

Key highlights: Revenues were above our estimates as weak revenue in Voltas' UCP segmentwasoffsetbytheprojectbusinessEMPrevenueswereup18%yoyduetopickup in large projects while UCP revenues fell 9%. Weak UCP margins led to a 230bps fall in...

UCP margins at 18% were the highest ever led by better product mix, lower raw material costsandoperationalefficiencies.OrdersintheEMPsegmentstoodatRs7.2bn(+989%yoy) onalowerbaseandtheorderbookwasup8%YoYatRs39bn.EMPmarginscontinueto...

Voltas? 4QFY15 APAT of Rs 1.2bn was ahead of our estimate of Rs 918mn, as UCP (Unitary cooling products) segment reported strong earnings, yet again.

Voltas 3QFY15 APAT of Rs 627mn was in line with estimates, primarily on account of higher than estimated other income. Operational EBITDA of Rs 452mn was below our estimate of Rs 705mn.