Voltas tanks 9%; CLSA cuts target, sees demonetisation impact

Moneycontrol Bureau

Voltas shares plunged 9 percent intraday Thursday after CLSA slashed target price on the stock to Rs 305 (from Rs 345), citing uncertainty for Q3 & Q4 due to demonetisation and GST.

With retaining sell rating, the brokerage house slashed FY17/18 EPS estimates by 2/5 percent with potential downside risks to earnings, depending on how end-user demand pans out after things settle down in a few months. Despite the recent correction, Voltas is trading above its long term average PE multiple of 19x, creating risks of further derating if uncertainty continues longer than expected, it says.

It believes nervousness among investors on the potential fallout of the currency ban on discretionary spending, along with lack of clarity on the transition impact of GST during Q4FY17, has created an uncertain environment for Voltas for the next two quarters, as reflected in the 17 percent stock correction over the last month.