7 VOLTAS share price target reports by brokerages below. See what is analyst's view on VOLTAS share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
We believe the complete lockdown would hit the entire supply chain of the UCP segment (contributes ~45% of sales) and derail Q1FY21 segment revenue. On the other hand, the EMPS business is also likely to be hit by a delay in project execution in the Middle East and India due to lockdown situation across operating geographies. However, we believe Voltas being a market leader in the cooling product segment would recoup sales as and when economic activity normalises in the coming future. We like Voltas for its strong brand recall and healthy balance sheet, which would cushion the company from any adverse situations. We upgrade our rating from HOLD to BUY with a revised target price of | 635/share ascribing PE multiple 8x, 8x and 32x to EMPS, EPS and UCP segment, respectively.
VOLT gave a cautiously optimistic outlook given 1) outperformance in the UCP segment (50% growth vs 30% of industry in 11MFY20) and 50bps market share gain across RAC segments 2) encouraging response to VOLTBEK portfolio with 2% market share in key segments and 3) improved order book in MEP led by domestic operations. Although the industry is witnessing reasonable demand post lifting of lockdown in May, 1Q21 sales & profitability are likely to be impacted due to 1) washout summer season sales and 2) high channel inventory (60 days) limiting primary sales. Also, with migrants returning to their hometowns, the pace of execution in MEP segment is likely to slow down in the near term. Although Voltbek JV launched mass market products in refrigerators and washing machine post commissioning of Sanand facility, lockdown might result in near term pressure on sales. We expect JV to report a loss of Rs1.5bn/Rs1bn in FY21/22. Although the near term looks hazy, we continue to maintain our positive stance on VOLT given 1) leadership position in high potential RAC segment 2) balance sheet comfort (Rs11bn net cash) and 3) sustained order wins in MEP segment. Maintain Accumulate with SOTP based target price of Rs564/- (valuing UCP business at 32xFY22 EPS).
With the hope of a normal summer, increasing inverter share of RACs, better product offerings, the company’s leadership in RAC, and stable prices, we expect Voltas to report a sales and PAT CAGR of 13%/22% over FY19-FY22E. It is confident of gaining 10% market share and profit break even in FY24 in the Beko venture, in which it has recently started in-house manufacturing. Given the PAT miss in Q3FY20, we marginally lower our PAT estimates by 7% for FY20E We continue to like Voltas for its structural story of AC under-penetration. We maintain our Buy rating, with a TP of `780 valuing it at 32x for FY21E.
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 33.6x of FY21E and 28.5x of FY22E earnings. Downwardly revising our revenue/earnings estimate by 4.6%/4.9% for FY21E to factor in muted outlook, and rolling over our estimates to FY22E, we maintain HOLD recommendation on the stock rating with a revised Target Price of Rs717 (from Rs639 earlier), valuing it at 30x of FY22E earnings.
Voltas posted 3QFY20 consolidated revenue of Rs14.9bn, flat YoY, and 11%/8% below our/consensus estimate. UCP sales grew 14% YoY to Rs6bn (40% of total sales) on a low base and in a non-seasonal quarter for ACs. Voltas maintained AC leadership with 24.3% YTD market share while it became third largest in Air Coolers with 11.2% market share. EMPS revenues fell 8% YoY to Rs8.1bn (54% of total sales) due to slower pace of execution. Order book was at life-time high of Rs70.2bn (up 41% YoY) with order inflow of Rs12.5bn in 3QFY20. Engineering revenue was flat YoY at Rs826mn (6% of total sales) with EBIT margin of 28%, up 160bps YoY. EBITDA fell 16% YoY to Rs976mn, with an operating margin of 6.5%, down 130bps YoY. Margin was below our/consensus estimate of 8.2%/7.7% due to lower EBIT margin in EMPS (down 330bps YoY to 4.6%) while UCP margin stayed healthy (up 160bps YoY to 10.1%). PAT stood at Rs869mn, up 7% YoY, 20% below our/consensus estimates each. We have marginally tweaked our estimates and retained Accumulate rating on Voltas with a revised SOTP-based target price of Rs715 (from Rs690 earlier). On September 2021E earnings, we assign a P/E of 40x to UCP segment and 15x to project business.
We maintain our HOLD rating on the stock with a target price of | 765/share, by ascribing a PE multiple of 40x FY21E earnings to UCP segment. We ascribe a PE multiple of 13x FY21E and 10x FY21E earning to EMPS and EPS segment, respectively.
We value VOLT on an SOTP basis with a target price of INR785 (UCP business at 35x Sep’21E EPS; EMP and Engineered Products business at 15x Sep’21E EPS). Maintain Buy.
We expect the economy to stabilise and trade tensions to normalise by FY21E, prompting an uptick in all segments. Hence, we maintain our Hold rating with a target price of Rs. 635 based on 29x FY21E adjusted EPS.
UCP outshines in peak summer; EMPS stays healthy Voltas posted healthy 24% YoY rise in consolidated sales to Rs26.5bn in 1QFY20, 12% above our estimate. UCP segment posted a stellar growth of 47% YoY to Rs17.5bn (66% of total sales), led by strong volume growth in AC during a harsh summer season. EMPS segment’srevenue fell by 5% YoY to Rs8.2bn (31% of total sales). Consolidated EBITDA was up 20% YoY to Rs2.9bn with an operating margin of 11%, down 30bps YoY but above our estimate of 10.4%. UCP segment’s EBIT margin was up 60bps YoY to 13.1% while EMPS segment alsoposted a healthy EBIT margin of 8%. Exceptional item worth Rs430mn (towards VRS) and loss from associates of Rs214mn (largely from Voltas-Beko JV) led to 10% YoY decline in reported PAT at Rs1.6bn. Adjusted for VRS expense (net of tax), PAT stood at Rs1.9bn, in line with our estimate. We have marginally tweaked our earnings estimates and retained Accumulate rating on Voltas with a revised SOTP-based target price of Rs625 (from Rs615 earlier). On FY21E earnings, we assign a P/E of 38x to the UCP segment and 15x to the project business.
We keep our target price unchanged at | 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.
Favourable weather drives UCP performance. Valuation & Outlook: We tweak our revenue, earning estimates upside for FY20E, FY21E by 0.3%, 0.5% and 0.7% and 6% YoY, respectively. Under our SOTP based valuation, we maintain HOLD on Voltas with a revised target price of | 645/share, by ascribing a PE multiple of 32x FY21E earnings to UCP segment. We ascribe a PE multiple of 17x FY21E and 12x FY21E earning to EMPS and EPS segment, respectively. We believe pricing pressure in the UCP segment would cap overall margin expansion for Voltas.
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. We reiterate our BUY recommendation on the stock with a revised Target Price of Rs647 (from Rs687 earlier), valuing it at 30x of FY21E earnings.
Q4 miss; Inflow and revenue guidance strong for FY20; Maintain Buy. Q4 was lower than expectations due to execution headwinds. Revenue and order inflow guidance continue to be strong in FY20, while the order pipeline in FY20 is promising with the T&D and rail having a visibility of Rs250bn worth of orders. T&D, railways and civil projects will drive earnings growth of 19% over FY19-21E. Post the Q4 miss, we reduce our Revenue/ EBITDA/PAT by 3%/3%/5% for FY20 yet considering strong revenue and order inflow guidance and solid return ratio profile, we maintain Buy for the stock, with TP of ` 350 (P/E-12x FY21E).
We cut our FY19/20 earnings estimate by 8% to factor in the weaker-than-estimated UCP margin and the higher-than-estimated losses in the VOLT BEKO JV. We maintain our Neutral rating with a TP of INR595 (valuing UCP at 35x, Engineering Product Services at 15x and EMP at 15x its FY21E earnings).
Voltas’s 4Q missed estimates, with high RAC channel inventory, an extended winter and weak UCP/EMPS segment margins. We cut EPS estimates by ~4% over FY19-21E to factor the miss in 4Q and moderation in order book growth in project business. Retail offtake of RACs has improved in Apr/May-19 driven by a hot start to summer. FY20 should see healthy volume growth for RACs after a tough FY19. Our SOTP for Voltas values EMPS/EPS/UCP at 17/20/35x Mar-21E EPS and Volt-Beko at 1x P/S, translating to a TP of Rs 658. Future growth drivers are intact. Maintain BUY.
Under our SOTP based valuation, we maintain HOLD on Voltas with a revised target price of | 605/share, by ascribing PE multiple of 32x FY21E earnings to UCP segment. We ascribe a PE multiple of 16x 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.
18.5% earnings CAGR over FY19-FY21E, strong cash flow, lean working capital cycle and strong long-term growth prospects of the AC and white goods sector will support the valuation of Voltas.
Voltas is focusing on consolidating its leadership (YTD market share gain of 180bps to 23.9%) and look at margin expansion mainly through cost optimization in 1) launch of new technology products in AC with rising share of inverter AC 2) expected savings in logistics and distribution costs post starting of Tirupati unit 3) increased local sourcing. We expect EMPS order inflow to improve in Middle East given firm crude prices, the benefit of which will accrue in FY21. Although Voltas-Beko JV will improve the effectiveness of distribution with full range of white goods, initial expenses on revamp and brand building will increase losses in JV to est Rs1.5bn in FY20 and Rs1.2bn in FY21. We estimate 15.9% EPS CAGR over FY19-21 and value the stock at 28xFY21. We downgrade to Hold with a target price of Rs584. Sharper recovery in EMPS and lower losses in Voltas Beko is a key risk to our call.
We studied the business cycles Voltas (VOLT) has faced over the past two decades to understand its competitive moats. Our two key findings: a) Several rounds of business transformation have helped the company find its real competitive edge, i.e. branding, distribution and asset-light strategy. b) The Voltbek JV would greatly add to bottom line over three– five years leveraging VOTL’s pan-India distribution and judicious product positioning in the mass premium range (VOLT’s forte). Given the target market would treble to USD15bn by FY25, we expect VOLT to generate substantial stakeholder value in the long run. Near-term seasonality risk is a blip at best. Maintain ‘BUY/SO’ with a revised TP of INR715 (versus INR650; consumer durables (CD) business valued at 38x June 2020E EPS) building in Voltbek at 5x June’ 20E sales, retaining it as our sector top-bet.
Key takeaways from Voltas’ analyst meet are: a) strong season in South helped room AC inventory normalise to 1.0-1.5 months; b) Voltas is looking to up its game in inverter AC—eyeing room AC SKU of 40-45 (38 currently). This, we believe, will be key at a time when brands are struggling to increase prices; and c) in the Voltbek JV, Voltas is planning to leverage its partner’s strong product prowess & its pan-India distribution franchise (15K plus) with a phased manufacturing set up. We retain our conviction on Voltas given its strong brand and robust distribution franchise driving superior return/cash flows versus peers. Upcoming season for room AC and the JV’s performance over ensuing quarters remain key monitorables. Maintain ‘BUY’ with TP of INR650, assigning 38x to the cooling business on June 2020 EPS.
We believe the lowest penetration of AC in India (among other white goods items) suggests the long-term growth story of Voltas will remain intact. However, in the premium product category, Voltas remained a slow entrant unlike LG that is now focusing only on inverter AC. We believe rising contribution of premium products (inverter AC) and stable raw material/currency movement would help in maintaining EBIT margin at ~11%, going forward. We maintain HOLD on Voltas with a revised target price of | 650/share. Under our SOTP based valuation, we value the UCP segment by ascribing PE multiple of 35x FY21E earnings. We ascribe a PE multiple of 15x FY21E and 10x FY21E earning to EMPS and EPS segment, respectively.
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 26.0x FY20E 22.8x FY21 earnings. We reiterate our BUY recommendation on the stock with an unrevised Target Price of Rs687, valuing it at 30x FY20E earnings.
We have marginally tweaked our earnings estimates and retained Buy rating on Voltas with a revised SOTP-based target price of Rs625 (from Rs620 earlier). On September 2020E earnings, we have assigned a P/E of 38x to UCP segment and 16x to project business. We note that air-conditioner (AC) is a seasonal business (sales driven by summer heat) and the weakness witnessed in 9MFY19 is not structural in nature.
We expect RAC industry to clock ~10% CAGR volume growth and model a mean reversion in FY20. We believe Voltas will be the key beneficiary given its leadership position and distribution strength. We value Voltas based on SOTP, valuing EMPS/EPS/UCP at Dec-20 P/E at 17/20/35x with TP of Rs 650 (Rs 640 earlier).
We believe the lowest penetration of AC in India (among other white goods items) suggests the long-term growth story of Voltas will remain intact. However, in the premium product category, Voltas remained a slow entrant unlike LG that is now focusing only on inverter AC (started 100% inverter transition last year) with over 53% market share. We believe a weak summer coupled with rising competition (in the premium product category) would cap the UCP segment margin, going forward. We introduce FY21E estimates with revenue, earning CAGR of 15%, 12% respectively. Rolling forward to FY21E, we maintain HOLD on Voltas with a revised target price of Rs 570/share. Under our SOTP based valuation, we value the UCP segment by ascribing PE multiple of 35x FY21E earnings. We ascribe a PE multiple of 15x FY21E and 10x FY21E earning to EMPS and EPS segment, respectively.
WecutourFY19/20earningsestimateby9%/6%to factor in the weaker-than-estimated UCP margin and the higher-than- estimated losses in the VOLT BEKO JV. We maintain our Neutral rating with a target price of INR535 (valuing UCP at 30x, Engineering Product Services at 15x and EMP at 15x its FY21E earnings).
3Q19 revenue grew by 9% led by strong 16% growth in EMPS revenues even as UCP continues to suffer due to soft Diwali and high inventory. We believe onset of summer AC sales, decline in inventory and response to Voltas Beko JV products will be key determinant in the near term. Voltas-Beko rollout is 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.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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