Buy Voltas; target Rs 81.6: Aditya Birla Money

Aditya Birla Money's report on Voltas

"Voltas continues to pass through a rough patch and the near term environment is also challenging. In the UCP segment the company continues to maintain its No.1 position while the EBIT margins are showing signs of stabilization. On the EMP segment especially on the international front it has been a big drag on the company’s overall financials and outlook in the near term is highly challenging, while on the domestic front order inflows are flowing but the momentum has slowed down. Engineering products division continues to maintain its growth momentum and market share."

"The company is likely to face near term headwinds as the macro as well as micro environment is highly uncertain. On the back of slower execution and margin pressures we revise our topline and operating margin estimates downwards and hence we revise our profit estimates downwards by 14.2 percent and 11.5 percent for FY14 & FY15 to Rs 2,200mn and Rs 2,532 respectively. We believe majority of the negatives have been priced in and we believe the worst is over for the company and hence we recommend "Buy" on the stock. We value the company at 8x FY15 EV/EBITDA and arrive at a price target of Rs 81.6 per share At the CMP of Rs 69.6 Voltas trades at FY15 P/E of 9.1x and 6.9x its FY15E EV/EBITDA," says Aditya Birla Money research report.

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