Voltas - Target Price Rs. 81 - Kotak

In our meeting with Voltas management, the company indicated that given the current scenario, it is difficult to predict or rule out further recurrence of cost escalations in the coming quarters. This is on account of execution challenges, delays in work certification and claim acknowledgement, which makes forecasting increasingly tough. However, the quantum of cost escalation should come down in the coming quarters, we believe.

We note other positive as well including 1) Potential of claims being accepted by client resulting in reversal of provisions 1) entrenched position in textile machinery segment 2) market leader in room AC segment which has huge upside in penetration 3) Substantial cash and liquid investments.

We remain positive on the stock and recommend Accumulate with an unchanged target price of Rs 81.

Source : Equity Bulls

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