Moneycontrol
Sep 15, 2017 12:02 PM IST | Source: Moneycontrol.com

As brokerages remain mixed on Voltas, stock falls 2%

Post an analysts call by the firm, brokerages highlighted the weak industry trends, but also said that the stock’s peak multiples could sustain as well.

 
 
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Shares of Voltas fell around 2 percent intraday on Friday following brokerage recommendations, which were largely mixed around the stock.

Post an analysts call by the firm, brokerages highlighted the weak industry trends, but also said that the stock’s peak multiples could sustain as well.

Last month, broking firm Motilal Oswal had retained a sell call on Tata Group firm Voltas with a 20 percent downside from the current level.

The research house maintained a cautious view on the stock given threat to margins driven by increasing competition in the room air conditioner segment, industry convergence to inverters where Voltas has weak share and rating change in January 2018.

In Q1 FY18, Voltas reported 17.68 percent rise in consolidated net profit at Rs 187.91 crore for the quarter ended June 30, on account of higher income which was inline with estimates.

Following are the brokerage views after the investor concall.

Brokerage: BofAML | Rating: Neutral

Bank of America Merrill Lynch said that domestic presents growth opportunity on current base with rural electrification. It also said that the company expects MEP margins to trend up to 7%; may take 3-5 years in their view.

Brokerage: UBS | Rating: Buy | Target: Rs 660

With legacy projects behind, the management expects 5-6% EBIT in the near term. It further said that the stock was trading near its peak multiple which may sustain.

Brokerage: Deutsche Bank Markets Research | Rating: Sell | Target: Rs 400

The global financial services firm said that the industry growth is weak and dealer feedback suggests that restocking is underoing slowly. It also expects margin compression due to pricing disruption and sees marketing expenses rising in Q4 on the launch of Voltas-Beko brand.
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