STOCK IN FOCUS
* Voltas – India’s largest AC and one of the world’s premier engineering solutions providers and project specialists – offers engineering solutions for a wide spectrum of industries.
* We are positive on Voltas owing to its market leadership position with 22.1% market share in domestic room AC market.
* For its JV company – “Voltbek” plans to launch over 100 SKUs over the next three months including 44 SKUs of refrigerators, 40 SKUs of washing machines, 12 SKUs of microwaves/ ovens and 7 SKUs of dishwashers.
* Looking ahead, we expect Voltas’ revenue and earnings to clock CAGR of ~12% each through FY18-FY20E. Strong balance sheet with cash surplus, healthy margin profile (RoCE at 20% & RoE at 15%), dividend payout track record and ability to pass on rising input cost continue augur well for Voltas. The stock has corrected ~14% in last 1 month, at CMP, the stock trades at 26.2x FY19E and 22.3x FY20E earnings. We maintained our BUY rating on the stock with a Target Price of Rs692 valuing the stock at 30x FY20E earnings.
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