Emkay's research report on Voltas
Voltas Q4FY16 revenues increased to Rs18.9bn (27% YoY, 44% QoQ) led by growth across all segments. Revenues in the EMPS segment surged to Rs8.2bn (37% YoY, 13% QoQ) as execution picks up in overseas projects. The EPS segment reported revenue growth at Rs 927mn (+14%YoY, -17% QoQ). The UCP segment which had faltered during 1HFY16 also grew to Rs8.6bn (10%YoY, 98%QoQ).
Going forward, margins are expected to improve in the EMPS segment as slow moving orders move out of the backlog and newer projects with better profitability (threshold margins of >5%) come into execution. In the RAC segment, we expect Voltas to report robust growth as warmer summer help sales during Q1FY17. In the air -cooler segment, Voltas has increased its product range and dealership network and is expected to gain revenue traction in the upcoming season. The stock trades at FY18 P/E multiple of 20x. Maintain Buy with revised target price of Rs 408 per share.
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