MOSL: VOLTAS (Sell)-Results above expectations-JV with Arcelik – a medium-term positive
​Voltas: Results above expectations; JV with Arcelik – a medium-term positive
(VOLT IN, Mkt Cap USD1.4b, CMP INR476, TP INR400, 16% Downside, Sell)
- Results above expectations: 4QFY17 revenues increased 10% YoY to INR20.4b (est. of INR19.3b). EBIDTA increased 23% YoY to INR2.2b (est. of INR1.9b), with the margin expanding 120bp to 10.9% (est. of 10.0%). Adj. net profit rose 46% YoY to INR2.0b (est. of INR1.4b).
- UCP sales grew 28% YoY to INR10.9b, led by early onset of summer. VOLT remained the market leader, with a share of 21.4%. EBIT margin was stable at 16.4%. EMP revenue declined 9% YoY to IN8.3b, led by slower-than-expected progress in some projects. EBIT margin for the segment expanded 250bp YoY to 5.7%, led by closure of low-margin legacy orders and execution of better-margin new orders. Management has guided for 6% EBIT margin for FY18.
- 'Voltas Beko' JV to manufacture and sell consumer durables products: VOLT has entered into a joint venture with Arcelik to manufacture and sell white good products (refrigerator, washing machine, microwave oven, etc.) under the brand name of 'Voltas Beko'. The JV intends to invest USD100m to establish a manufacturing and distribution network in India. The JV expects to roll out the first set of products in 2HFY18.
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.
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