Prabhudas Lilladher recommended hold rating on Voltas with a target price of Rs 584 in its research report dated Jun 19, 2019.
Prabhudas Lilladher's research report on Voltas
Voltas Analyst meet indicated positive growth momentum in UCP in 1Q but reinforced our cautious stance given long gestation of Voltas-Beko JV. RAC industry has started FY20 on a positive note given strong demand due to harsh summer and low base of 1QFY19. The management has maintained annual margin guidance of 11% in UCP. Voltas-Beko JV performance is in line with internal benchmarks, it is expected to remain in an investment phase over the next 3-4 years given expenses on distribution, branding and stiff competition in white goods market. We estimate the JV to report loss of ~Rs1.5bn/Rs1.2bn in FY20/21. MEP business is focusing on domestic projects in Rural Electrification and Urban Infra as return of NDA Govt is likely to retain continuity in policies.
We estimate 15.9% EPS CAGR over FY19-21 and value the stock at 28xFY21 earnings. Maintain Hold.
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