Voltas Q1 total income seen up 5% to Rs 1418 cr

Voltas , premier engineering solutions provider and project specialists, is set to announce its results for April-June quarter today. Analysts on an average expect the consolidated profit after tax to go down by 45% year-on-year to Rs 72 crore during the quarter.

Earnings before interest, tax, depreciation and amortisation (EBITDA) too is seen going down by 7% to Rs 102 crore during the same period. EBITDA margin is likely to fall by 90 basis points to 7.2% versus 8.1% YoY.

But, total income is expected to rise by 5% to Rs 1,418 crore in the first quarter of FY13 from Rs 1,348 crore in a year ago period.

Adjusted profit after tax

Profit after tax for the last year needs to be adjusted for exceptional items of Rs 81.5 crore that related to sale of properties and profit on transfer of material handling business. After adjusting for these items, profit after tax comes to Rs 77 crore.

Adjusted profit after tax is expected to go down by 6.5% to Rs 72 crore from Rs 77 crore year-on-year. 

Expectations

Analysts expect weak performance this quarter due to slowdown across projects and consumer business for Voltas.

Slowdown in the order inflow across capital goods space is expected to take another 1-2 quarters to recover.

Electro-mechanical projects (EMP)

Order inflow momentum continues to remain weak in Middle East. Despite bidding process being strong, final decisions for awarding projects are being prolonged.

Clients are delaying mobilization advances that is creating cash crunch like situation for the company.

Even order inflow in India for this segment remains weak.

Margins will remain under pressure due to cost push inflation especially in its AC segment. Company sources its materials from China.

Margins in the EMP segment will be impacted by weak execution, cost overruns and low carry forward of orders.

Rise in input costs and execution of low margin orders will further impact EBITDA margin negatively.

Investors should watch out for progress on Sidra project and outlook for order inflows.