The general evaluation of VOLTAS (IN), a company active in the Heavy Construction industry, has been upgraded by the independent financial analyst theScreener with the addition of a star. Its fundamental valuation now shows 4 out of 4 possible stars while its market behaviour can be considered as defensive. theScreener believes that the additional star(s) merits the upgrade of its general evaluation to Positive. As of the analysis date September 7, 2021, the closing price was INR 1,187.25 and it...
VOLTAS: Disappointing results; outlook remains cautious; Upcoming festive season key for RAC offtake (VOLT IN, Mkt Cap USD4.6b, CMP INR1025, TP INR1065, 4% Upside, Neutral) Voltas (VOLT) reported a weak set of earnings, with revenue/EBITDA miss of 9%/27%. The strong show in the Electromechanical Projects (EMP) segment failed to offset the weakness in the Unitary Cooling Products (UCP) segment. The ordering intake/outlook for the Projects business remained subdued with clients delaying th...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
Q3FY20 result highlights Adj. PAT declined 6.2% yoy to Rs869bn: Revenue flat yoy to Rs14.9bn while margins contracted 107bps yoy to 6.2% (weak EMP performance). Hence, EBITDA declined 14.5% yoy to Rs921mn. Lower other income (-4.8% yoy to Rs597mn), higher depreciation (+30% yoy to Rs80mn) and sustained Volt-Bek JV loss impacted profitability. UCPL performance sustains: Revenues +14% yoy to Rs6bn led by market share gains (YTD 24.3%; FY19 at 23.9%). Voltas’ growth was driven by inverter segme...
VOLTAS: EMP performance subdued; UCP clocks double-digit margins (VOLT IN, Mkt Cap USD3.2b, CMP INR681, TP INR785, 15% Upside, Buy) Key UCP segment continues to surprise, EMP to bounce back Voltas' (VOLT) 3QFY20 earnings disappointed, entirely led by weak execution in the EMP segment and provisions impacting margins. However, good growth in the UCP segment (+14%) was a key positive, along with double-digit margins at 10.1%. Also, ordering in the EMP segment was strong leading to an all-t...
Voltas: RAC thriving in spite of intense competition (VOLT IN, Mkt Cap USD3.2b, CMP INR679, TP INR785, 16% Upside, Buy) US-China trade war eases margin pressure on UCP segment According to Voltas’ (VOLT) management, the company is benefiting from the fallout in the US-China trade war. Due to high inventory build-up in China, VOLT was able to avail high discounts, which more than offset the import duty increase. Thus, based on the present situation, it is confident of achieving an 11% EBIT ...
Q2FY20 result highlights Adj. PAT at Rs1.13bn (+8.8% yoy): Revenue flat yoy to Rs14.2bn (weak EMP revenues) while margins contracted 20bps yoy to 7%. Hence, EBITDA declined 2.9% yoy to Rs990mn. Higher other income (+51% yoy to Rs795mn), lower finance cost (-23% yoy to Rs49mn) and lower JV losses (Rs92mn) boosted PAT. Tax rate at 26% included Rs323mn DTA reversal. Reported PAT at Rs1.06bn (+2.9% yoy) led by Rs61mn VRS. UCPL performance robust: Revenues grew 19.2% yoy to Rs5.3bn on back of mar...
VOLTAS: UCP going strong; EMP joins the party (VOLT IN, Mkt Cap USD3.1b, CMP INR667, TP INR785, 18% Upside, Buy) ** In-line earnings: Consol. Revenues were flat YoY at INR14.2b (5% miss), which can be attributable to the miss on revenue in Electro Mechanical Projects (EMP). EBITDA margin declined 20bp YoY to 7.4% (v/s est. 7.8%). On account of higher other income (+57.6% YoY), PBT (before share of JV) grew 16% YoY to INR1.7b (9% beat). BEKO's JV losses were at INR100m (v/s est. INR110m). Adjust...
Global Equities Beginning a New Leg Higher Positive technical developments have continued and global equities are now breaking out to new highs -- something we noted was increasingly likely in last week's Int'l Compass. These breakouts and other technical developments highlighted below argue that this is the beginning of a new leg higher. Now is the time to be playing offense. • MSCI ACWI, EAFE, and STOXX Europe 600 are Breaking Out. The ACWI, EAFE, and STOXX 600 are making bullish inflectio...
Breakout probability on the rise The probability for a breakout for global equities (MSCI ACWI) has increased in the past week based on several positive technical developments which we highlight below. Still, there are several indicators that continue to tell us we are not yet out of the woods. • Emerging Markets. The MSCI EM index exhibits bullish price and RS reversals -- add exposure/market weight. This is a major positive for both EM and global equities as it is a characteristic consist...
After failing to break above resistance, global equities (MSCI ACWI) have had a rough start to the third quarter. Tuesday's 10-year low reading for September's US ISM manufacturing index further spooked investors and reignited global growth concerns. Continued weakness in global manufacturing and the US-EU tariff escalation raises the potential for a breakdown in global equities, however our outlook remains neutral as long as the MSCI ACWI remains confined to its horizontal range. • Prevailin...
We met Voltas’ management; below are key takeaways: UCPL - demand seeing an uptick: While the initial sales targets (Rs500m) for Onam festive are likely to be missed due to floods, demand is seeing an uptick and should aid double digit growth in 2QFY20. Overall, Voltas has not seen any significant impact of economic slowdown on UCPL or VoltBek products. Voltas remains confident on sustained mkt share gains (+60bps yoy to 24.1% in 1Q20; 25% in Jun-19; 22% in FY18) led by focus on products, bra...
VOLTAS: Defies slowdown; Raise earnings; Upgrade to BUY (VOLT IN, Mkt Cap USD2.8b, CMP INR598, TP INR700, 17% Upside, Upgrade to Buy) Operating performance exceeds expectations: revenue increased 24% YoY in 1QFY20, exceeding our estimate by 11%, led by strong 47% growth in UCP segment. As a result of a higher effective tax rate (32% v/s our estimate of 27%) and higher losses in JVs, net profit increased at relatively low rate of 6% YoY to INR1.9b (in-line). Strong summer trumps consumpti...
We met Voltas’ management; below are key takeaways: Unitary Cooling – strong growth in April-May 19: led by strong summers with North continuing to see high temperatures in June 19. Despite demand being strong, Voltas and peers refrained from price hikes (except 1-2% in certain markets), given their primary focus on inventory liquidation and sustained competition. However, margins are expected to expand, led by positive operating leverage and tweaks on promotional schemes, ad spends, etc. A s...
Voltas: RAC witnesses strong start to FY20; UCP margins to stabilize at 11-12%, earmarks INR5b capex for new facility (VOLT IN, Mkt Cap USD2.9b, CMP INR610, TP INR595, 2% Downside, Neutral) We met management of Voltas (VOLT) to understand the industry trends and the company’s progress in its various segments and projects. Key takeaways: Room AC (RAC) industry witnesses a strong start to FY20: After remaining weak over the last two years, RAC industry demand picked up strongly in April/Ma...
Q4FY19 result highlights Adj. PAT at Rs1.39bn (-28% yoy): Revenue +1.5% yoy to Rs20.52bn (led by weak UCPL performance), margins fell 470bps yoy to 6.5%. Hence, EBITDA fell 41% yoy to Rs1.3bn. Lower other income (-3.5% yoy) and higher JV loss (Rs215m) further impacted PAT. However, lower tax of 12% (deferred tax asset) restricted PAT decline. UCPL weakness sustains: Revenues fell 6.3% yoy to Rs9.98bn on late onset of summer and channel inventory liquidation resulting in limited primary sales...
Voltas: Underperformance on most fronts; UCP reeling under cost pressure (VOLT IN, Mkt Cap USD2.7b, CMP INR580, TP INR595, 2% Upside, Neutral) Earnings disappointment attributable to margin miss: Sales came in muted at INR20.6b, implying a 7% miss to our estimate, primarily attributable to a 6% decline in UCP revenue. EBITDA margin came in at 7% (our estimate: 11.3%), driving a 42% miss in EBITDA. UCP margin contracted to 10.4% from 17.2% in the year-ago period, as VOLT opted to address t...
We met Voltas’ management. Below are the key takeaways: Unitary Cooling – inventory levels normalise: Inventory levels have normalised to ~1-1.5 months driven by an uptick in South, specifically in Kerala in Jan-Feb 2019. However, due to extended winters, demand is yet to pick in North (~40%+ of demand), where the season usually picks up post Holi festival. Accordingly, the last fortnight of March are critical for the season. At industry level price hikes are imminent due to increased input c...
Voltas: Room AC industry to post double-digit growth in FY20; UCP margins to sustain at 11-12%, earmarked INR5b capex for new facility (VOLT IN, Mkt Cap USD2.9b, CMP INR618, TP INR590, 5% Downside, Neutral) We recently met management of Voltas (VOLT). Key takeaways: Expect Room AC industry to grow at 10% for FY20: Voltas expects the Room AC industry to register double-digit growth in FY20 on back of a pick-up in demand in certain pockets of the country. VOLT expects volumes to increase ...
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