Hold Voltas; target of Rs 609: Prabhudas Lilladher

Prabhudas Lilladher's research report on Voltas

Voltas remains confident of achieving annual margins of 11% in UCP segment led by 1) strong 1Q20 performance on the back of favourable summer season & delayed onset of monsoon 2) launch of new technology products in AC with rising share of inverter 3) expected savings in logistics and distribution costs post starting of Tirupati unit and 4) increased local sourcing. With uncertainty relating to elections behind and expected resumption of government spending on infrastructure, the MEP segment shall continue to focus on rural electrification and urban infrastructure projects.

Outlook

We estimate 14.5% EPS CAGR over FY19-21 and value the stock at 28x June21 EPS. Maintain Hold with a target price of Rs609.

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