MOSL: VOLTAS (Upgrade to Neutral)-Results exceeds expectation on strong UCP segment performance
​Voltas: Results exceeds expectation on strong UCP segment performance
(VOLT IN, Mkt Cap USD1.4b, CMP INR570, TP INR550, 2% Downside, Upgrade to Neutral)
- Results above expectations: Sales of INR10.4b (+7% YoY) were in line with our estimate of INR10.8b. EBITDA stood at INR857m (+25% YoY), with the margin of 8.3% (+120bp YoY) exceeding our estimate of 7%, led by higher sales contribution from UCP segment (40% in 2QFY18 v/s 36% in the year-ago period). PAT rose 22% YoY to INR954b (est. of INR714m).
- UCP sales rise 15% YoY to INR4.1b; margin at 12.4% (+90bp YoY). Room aircon growth of 15% was ahead of industry growth (flat YoY), driven by market share gain (23% in 2QFY18 v/s 22.2% in 1QFY18). Room aircon sales were driven by channel restocking, but secondary sales weakened on pre-buy in June and extended rainfall in the quarter. Margin improved 90bp YoY on a) operating leverage and b) lower cost inventory of RM being utilized during the quarter – thus no impact of commodity price rise.
- EMP segment revenue rose 3% YoY; margin at 5.4%. GST impacted domestic execution, as contracts were renegotiated; impact to remain in Q3 as well. Margin expanded 5,330bp YoY led by a focus on profitable orders.
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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