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  • Stock recommendation: Voltas Ltd – ACCUMULATE – TP Rs.658

    Publish date: August 13, 2018

    Result Update

    Voltas reported higher than expected profits for the first quarter. The company has continued to maintain its market leadership in room AC business. Order book is also at a healthy level.

    Key Highlights

    • Revenue growth in Q1FY19 was muted due to 11% decline in room AC market in the first quarter.
    • The company reported margin expansion in MEP and Engineering Services segments which offset the margin contraction in UCP segment.
    • Order intake was subdued during the quarter but the outlook is improving. The management highlighted that it is negotiating several major orders which are at advanced stages of finalization.

    Valuation & Outlook

    • Voltas is valued at 34x and 26x FY19E and FY20E earnings respectively. Valuations are at a premium to historical trend but are at a discount to sector peers (Symphony, Whirlpool, IFB, Havells etc).
    • While we remain positive on the business, however, in view of modest upside, we maintain Accumulate rating (BUY on declines) on the stock with a revised target price of Rs 658 (Rs 583 earlier).


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