GEPL Capital neutral on Voltas

25488 Investors following Voltas. Share this News with them.

0

Like this story, share it with millions of investors on M3

GEPL Capital neutral on Voltas

GEPL Capital has maintained neutral rating on Voltas, in its August 1, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy TIL; target of Rs 680: Sushil Finance Buy OnMobile Global; target of Rs 83: ICICIdirect.com Way2Wealth neutral on Cummins India ALSO READ See previous views by GEPL Capital See what other Experts & Brokerages are saying about Voltas See messages about Voltas Voltas BSE | NSE 29/05/12 Are Mutual Funds betting on Voltas?

GEPL Capital has maintained neutral rating on Voltas , in its August 1, 2011 research report.

"Voltas reported revenues of Rs 13.5bn, a decline of 4% YoY for Q1FY12, this was partly owing to decline in performance of the Electro mechanical projects & services (EMPS) & Unitary Cooling segment and partly because transfer of Material handling business (Voltas transferred this business to the JV company VMH Pvt. Ltd. formed between Voltas Ltd & German group KION Ltd.) has taken out its revenue from the Engineering Products & Services segment (EPS), hence this segment is not comparable YoY."

"EBITDA declined by 15% YoY to Rs 1.1bn due to decline in sales, EBITDA margin shrank by 100 bps YoY to 8.1% due to 9% increase in employee expenses. EBIT margins declined by 170 bps YoY to 7.3% for Q1FY12 primarily due to more then 100% rise in depreciation expenses (we will look for the reason on the conference call today). • PAT came in at Rs 1.3bn, a growth of 41% YoY. Though if we adjust this for exceptional items (one time gain of Rs 815mn arising out of sale of business's), the PAT stands at Rs 757mn, a decline of 19% which is marginally higher then sales & EBITDA decline due to 60% increase in interest expenses YoY."

"At CMP of Rs 138 the stock is trading at 13X its FY11 EPS of Rs 10.6. The FY12E consensus EPS estimate for the company is Rs 13. Hence, Voltas is trading at 10.6X its 1 year forward (FY12E) EPS, though, at current valuations the stock looks attractive considering its average 1 year forward PE band is between 15-16X. But consistently not being able to improve its margins and sales has become a drag for its stock price which declined by more then 33% over last one year. We would like to withhold our target price & rating and would remain "neutral" on the stock out till we get a more clear perspective from management on the quarterly result con-call," says GEPL Capital research report.

What stocks does Citi hold?

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment