Voltas Ltd - 4QFY2016 Result Update - Angel Broking

Voltas reported a strong set of numbers for 4QFY2016. The top-line at Rs. 1,876cr 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 Rs. 819cr (accounting for 44% of the company's overall 4QFY2016 revenues), whereas the UCP segment's revenue at Rs. 859cr 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 in 3QFY2016 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 Rs. 176cr, which is up 49.5% on a yoy basis. On adjusting for exceptional items, the PAT stood at Rs. 149cr, 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 Rs. 959cr for the quarter. The order book for the EMP segment as of 4QFY2016-end stands at Rs. 3,914cr (order book [OB] to LTM ratio of 1.4x). Recent report by GFK Nielsen states that Voltas has retained its top slot in the domestic AC sales market in FY2016, with ~21% market share.

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 25.0x PE multiple to our FY2018E EPS estimate of Rs. 16.3/share and arrive at price target of Rs. 407. This reflects 25% upside potential from the stock's current market price. Accordingly, we continue to maintain our 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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