Buy Voltas; target of Rs 1260: Dolat Capital Market

Dolat Capital Market's research report on Voltas

Q3 results, ahead of estimates (Exhibit 1), saw strong performance of RAC continuing with 43% volume growth, double digit EBIT margins and continuing leadership with market share at 26%. Overall PAT could have been better but for the mix in projects business which also saw time-based provisions. The board has approved restructuring of its business into B2C and B2B. We view this as a long term positive when it happens as it gets a sharper focus on the durables business. The AC under penetration story remains strong.

Outlook

Voltas continues to leverage its brand name, market share and distribution network in expanding market share while maintaining profitability. It is aided by its product and regional mix. We maintain Buy with a TP of Rs1260, valuing it at 50xSep22E.

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