MOSL: VOLTAS (Neutral)-Results exceed expectations driven by strong UCP performance
Voltas: Results exceed expectations driven by strong UCP performance
(volt IN, Mkt Cap USD3.1b, CMP INR600, TP INR630, 4% Upside, Neutral)
- Results above expectations: Sales grew 17% YoY to INR13.7b (in-line) in 3QFY18. EBITDA rose 34% YoY to INR1.2b; margin stood at 8.6% (+110bp YoY) v/s our estimate of 7%, led by higher margins and sales contribution (40% in 3QFY18 v/s 34% in 3QFY17) from the UCP segment. PAT stood at INR1b (+23% YoY) v/s our estimate of INR0.9b.
- UCP sales rise 32% YoY to INR5.4b; EBIT margin up 240bp YoY: Room air conditioner growth of 32% YoY was ahead of our estimate of +15%, driven by a) channel restocking post GST and b) pre-buy before the implementation of the new energy ratings for ACs from Jan’18. Market share stood at 23.7% v/s 21.7% in 3QFY17. Margin improved 240bp YoY, led by a) operating leverage on higher volumes and b) lower SG&A costs in a lean quarter.
- EMP revenue up 7% YoY; margin at 7.1%: Sales of INR7.5b (+7% YoY) were below our estimate of INR8b; however, the margin expanded 320bp YoY to 7.1% due to the focus on profitable orders and good execution in domestic/overseas jobs. VOLT has exposure of INR1.8b for under construction/completed jobs in Oman and Dubai, where Carillion PLC (recently declared bankruptcy) is the main contractor along with local partners. Orders stood at INR5.5b (+24% YoY), with order book at INR45b.
Voltas is an air conditioning company based in India. Co. offers engineering solutions for industries in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, mining and construction equipment, water management & treatment, cold chain solutions, building management systems, and indoor air quality. Co. is principally active in the management and execution of electro-mechanical projects and the installation and servicing of diverse technology-based systems. Co.'s operations are organized along three business segments: Electro-Mechanical Projects & Services; Engineering Products & Services; and Unitary Cooling Products.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.