Buy Voltas; target of Rs 680: JM Financial

JM Financial's research report on Voltas

We met the Voltas management for an update on its growth outlook and the key takeaways are as follows: a) While nonseasonal rains continued to play havoc, a favorable base and market share gains may help maintain single-digit volume growth. b) The company hiked prices by 2-5% from mid-May��18 to counter rising commodity prices and a depreciating INR (40-45% import content in room ACs). c) Consumer durables products under the Voltbek JV are slated to be launched during the festive season in 2HFY19; these would be imported in CKD form for the first 18 months. d) An increase in the share of rural electrification (RE) projects to 35-40% of Voltas�� order book is likely to reduce its average execution cycle, while the launch of DDUGJY scheme phase-2 should keep inflows strong in FY19-20. e) EMP margins are likely to sustain at 7-7.5% over FY19-20 as management remains cautious when bidding for new orders in the Middle East, despite a pick-up in tendering activity.

Outlook
We maintain BUY with an SOTP-based TP of INR 680, implying 30x FY20E EPS

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Read More First Published on Jun 20, 2018 05:29 pm