IGI Logo

Result Synopsis

Voltas has delivered lowerthan expected revenue growth withUCP growing by 12.7% and EMPS segment growing 7.8%. Voltas continues to lose market with YTD February market share at 21.9%, while market share for month of February stood at 18.1%. Voltas has not taken any price increase in Q4, and future price increase will depend on market conditions and competition. Volt?Bek has 26% volume growth in Q4 and FY23 growth for Volt?bek is in range of 15?18%. The projects business continues to be marred by provisioning related to international arising out of delay in certification and collections. The company has initiated legal actions to recover dues. On the positive side order inflow in the EMPS has remained strong with inflow amounting to Rs19bn in Q4 .We however continue to remain cautious on the stock with Neutral rating as 1) market share gains will be difficult to come by, 2) Margins in UCP are structurally trending lower, 3) Project business continues to face execution and collection challenges particularly in international geographies, and 4) Volt? beck continues to incur losses and is expected to take more time than estimated to achievebreak?even status.

Voltas being a market leader with solid distribution presence and increasing product offerings on the commercial refrigeration and RAC segments should see growth improving as it has taken corrective actions to re?gain its market share. This along with better focus on project business along with better risk mitigation policies will result in improved performance. Volt?Bek JV has stared gaining prominence in the market and localized production is expected to increase efficiency and bring down losses. We have modeled lower margins of UCP segment for FY24 and FY25. We now factor in FY22?25E Revenue/EBITDA/PAT CAGR of 20%/36%/142% and maintain our neutral rating with SoTP based TP of Rs840. We have lowered our multiple in the products business (UCP) to 45x and value projects business at 25x (in line with peers). We see strong momentum for RAC continuing upcoming summer and steady improvement in project business.

Result Highlights

* Quarter summary – Voltas delivered revenue growth of 10.9%. UCP registered revenue growth of 12.7%, EMPS (Electromechanical Projects and services) and EPS (Engineering products and Services) segment registered growth of 7.8% and
15.3% yoy respectively.

* UCP –: Revenue grew 12.7% yoy. UCP business has relatively performed better amid lower consumer sentiments towards discretionary spends and unseasonal rains. EBIT margin stood at 10.0% vs 10.6% in Q4FY22 contraction of 52bps yoy. Voltas continues to be the market leader in ACs with YTD February market share of 21.9%.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at  https://www.rathi.com/LeadGenerate/Static/disclaimer.aspx
SEBI Registration No.: INZ000170832

Above views are of the author and not of the website kindly read disclaimer