Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessStocks

Hold Voltas; target of Rs 645: ICICI Direct

ICICI Direct recommended hold rating on Voltas with a target price of Rs 645 in its research report dated August 09, 2019.

August 12, 2019 / 04:43 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

ICICI Direct's research report on Voltas

Voltas’ Q1FY20 UCP performance was better than our estimate with segment revenue growth of 47% YoY (vs. our estimate: 18%). We believe strong growth in the segment came on the back of a strong summer, change in product mix (sharp increase in contribution of inverter AC into total sales) and low base of last year. However, EMPS and EPS segment revenue came in below our estimate mainly due to slow execution of domestic orders (due to general elections) and continuous slowdown in the textiles machinery division. On the margin front, though the company witnessed improved profitability in the UCP segment (up 61 bps YoY at 13%), the other two segment EBIT margin declined ~200 bps YoY. As a result, there was slight pressure on the EBITDA margin to the tune of 35 bps YoY. The management has reiterated profitability of the UCP division to be in the range of 11-12% (vs. 11% earlier) with strong volume traction in coming periods. We revise our revenue, earning estimate upside by 4%, 3% and 5%, 6% YoY, respectively, with strong growth in the UCP segment.

Outlook

We keep our target price unchanged at Rs 645/share with a HOLD rating, ascribing a PE multiple of 32x FY21E earnings to UCP segment. We ascribe a PE multiple of 15x FY21E and 10x FY21E earning to EMPS and EPS segment, respectively. We believe pricing pressure in the UCP segment would cap overall margin expansion for Voltas.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Aug 12, 2019 04:43 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347