Views on Voltas Ltd 1QFY2017 Results: Angel Broking

Views of Mr. Santosh Yellapu (Sr. Equity Research Analyst - Capital Goods, Angel Broking) on Voltas Ltd 1QFY2017 Results:

Strong set of 1Q numbers, UCP outperforms our expectations

"Voltas reported impressive set of 1Q numbers. Voltas reported better than expected top-line numbers mainly driven by strong execution seen across their EMP and sales across their UCP segment. Voltas reported top-line growth of 18.2% YoY to INR 1,845cr. UCP segment impressed us with 28.9% YoY increase in top-line to INR 1,195cr (65% of 1QFY2017 revenues). Also, EMP and EPS segments reported better than expected top-line numbers at INR 580cr and INR 69cr, respectively. Higher than expected contribution from UCP segment led to surprise on the EBITDA margin front at 10.3% for 1QFY2017. Also, EMP segment maintained its last year's turn-around momentum, with 1.9% EBIT margin, against 1.5% margins in 1QFY2016. Better than expected sales at UCP segment, coupled with higher other income helped the company report Core business PAT of INR 158cr, which is up 53.7% on INR basis. On considering the impact of comprehensive other income (includes INR 21cr of gain on revaluation of longer term equity investments) and exceptional item (~INR 1cr), PAT grew INR 87.3% YoY to INR 184cr. Another, positive emerging from results is INR 731cr of order wins from the Middle East markets. Order book for EMP segment at 1QFY2017-end, stood at INR 4,417cr (OB to LTM ratio of 1.2x). Gfk Nielsen report also indicates that Voltas continues to retain its top slot in the domestic AC sales market. Strong sales of Voltas AC, gradual improvement in their EMP segment business, comforts us that Voltas stock is poised to get re-rated from here-on. We continue to maintain BUY rating on Voltas with a price target of INR 407."

Shares of VOLTAS LTD. was last trading in BSE at Rs.348.6 as compared to the previous close of Rs. 347.1. The total number of shares traded during the day was 169417 in over 5323 trades.

The stock hit an intraday high of Rs. 352 and intraday low of 345.8. The net turnover during the day was Rs. 59183234.

Source : Equity Bulls

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