Views on Voltas Limited 4QFY2016 Results: Angel Broking

Views of Mr. Santosh Yellapu (Sr. Equity Research Analyst, Angel Broking) on Voltas Limited 4QFY2016 Results:

Strong set of 4Q numbers, EMP segment outperforms our expectations

"Voltas reported strong set of 4Q numbers. Voltas reported better than expected top-line numbers mainly driven by strong execution seen across their EMP segment. Voltas reported top-line growth of 26.4% YoY to INR 1,876cr. EMP segment impressed us with 36.5% YoY increase in top-line to INR 819cr (44% of 4QFY2016 revenues), whereas UCP segment reported almost in-line set of top-line numbers at INR 859cr. Higher than expected contribution from EMP segment during the quarter led to miss on EBITDA margin front. Voltas reported almost flat YoY EBITDA margins at 9.2% for 4QFY2016. Notably, with most of the legacy projects nearing completion, EMP segment reported for the first time in recent quarter's strong segment level EBIT margin of 3.4%, against loss in the earlier quarter and 0.7% margins in 4QFY2015. Better than expected execution, coupled with higher other income helped the company report PAT of INR 176cr, which is up 49.5% on YoY basis. On adj. for exceptional items, Adj. PAT stood at INR 149cr, still reporting sharp 27.1% YoY increase. Adj. PAT margins were at 7.9% for 4QFY2016, same as in the year ago quarter.

Another, positive emerging from results announced is strong 4QFY2016 order inflows of INR 1,218cr (~40% being from Middle East markets), up 124.1% YoY. Order book for EMP segment at 4QFY2016-end, stands at INR 3,914cr (OB to LTM ratio of 1.4x). Gfk Nielsen report also indicates that Voltas continues to retain its top slot in the domestic AC sales market. This when coupled with strong sales seen in the ongoing summer season, comforts us that the stock is poised to get re-rated from here-on. We continue to maintain BUY rating on the stock."

Shares of VOLTAS LTD. was last trading in BSE at Rs.338.05 as compared to the previous close of Rs. 332.65. The total number of shares traded during the day was 124966 in over 2169 trades.

The stock hit an intraday high of Rs. 339.8 and intraday low of 332.7. The net turnover during the day was Rs. 41987382.

Source : Equity Bulls

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