Voltas reported a strong set of numbers for 4QFY2016. The top-line at Rs1,876cr
is up 26.4% yoy and is higher than our expectation, mainly driven by strong
execution across the EMP segment. The EMP segment impressed us with a 36.5%
yoy increase in revenue to Rs819cr (accounting for 44% of the company’s overall
4QFY2016 revenues), whereas the UCP segment’s revenue at Rs859cr is almost
in-line with our estimate. The EBITDA margin for the quarter was flat yoy at 9.2%.
Notably, with most of the legacy projects nearing completion, the EMP segment
reported a strong EBIT margin of 3.4%, as against a loss and 0.7% margin in the
corresponding quarter of the previous year. Better than expected execution
coupled with higher other income helped the company report a PAT of Rs176cr, which
is up 49.5% on a yoy basis. On adjusting for exceptional items, the PAT stood at
Rs149cr, reporting a sharp increase of 27.1% yoy. The Adj. PAT margin for the quarter
stood at 7.9%, which is the same as in the corresponding quarter a year ago.
Another positive is the company announcing order inflow of Rs959cr for the
quarter. The order book for the EMP segment as of 4QFY2016-end stands at
Rs3,914cr (order book [OB] to LTM ratio of 1.4x).
A report by GFK Nielsen states towards Voltas having retained its top slot in the
domestic AC sales market in FY2016.
Valuation: We expect Voltas to report a strong 13.3% top-line and 18.1%
bottom-line CAGR during FY2016-18E, respectively. On considering the case for
improvement in all of its business segments’ performances, we expect improved
profitability and better investment return ratios for the company, going forward.
We now assign Voltas a 25.0x PE multiple to our FY2018E EPS estimate of
Rs16.3/share and arrive at a price target of Rs407. This reflects 24% upside
potential from the stock’s current market price. Accordingly, we continue to
maintain our BUY rating on the stock.
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...