Voltas - 1QFY2017 Result Update - Angel Broking

Voltas reported a strong set of numbers for 1QFY2017. Top-line at Rs. 1,845cr is higher than our expectation and up 18.2% yoy, led by strong UCP segment sales. UCP segment impressed us with 28.9% yoy increase in revenue to Rs. 1,196cr (65% of overall 1QFY2017 revenues). EBITDA margins for the quarter expanded by 204bps yoy at 10.3%. With most of the legacy projects nearing completion, the EMP segment reported 1.9% EBIT margin, against 1.5% in corresponding quarter of previous year. Better than expected UCP segment sales coupled with higher other income helped the company report a PAT of Rs. 158cr, up 53.7% on yoy basis. On adjusting for ~Rs. 1cr of exceptional item, Adj. PAT grew 52.8% yoy to Rs. 157cr. Another positive is strong order inflows of Rs. 1,083cr for the quarter. Order Book for EMP segment as of 1QFY2017-end stands at Rs. 4,417cr (order book [OB] to LTM ratio of 1.6x).

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 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 17% upside potential from the stock's current market price. Accordingly, we continue to maintain BUY rating on the stock.

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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