Live news , top stories, corporate news, company news, sector news, economy news, results analysis news, ceo interviews, fund manager interview, advisor interview, market news, bazaar talk, hot stocks news, ipo news, commodities news, mutual fund news, insurance news, news wire
22 April, 2021 08:27 IST
Voltas strong performance raises expectations of blockbuster summer sales: Motilal Oswal
Source: IRIS | 05 Mar, 2021, 01.27PM
Rating: NAN / 5 stars.
Comments  |  Post Comment

 Voltas (VOLT) 3QFY21 earnings were 31% better than our expectation, led by betterthan-expected execution in the EMP segment,strong volume growth in the UCP segment, with ongoing cost rationalization leading to higher margin. It has retained its numero uno position in Inverter Air Conditioners/Room Air Conditioners (RAC) with a market share of 21.8%/26% in Dec'20. Share of Inverter ACs now constitutes 60% of RAC sales (v/s 49% in 3QFY20).

With a rise in commodity prices, the management has undertaken a 5-6% price increase across the UCP segment, with COVID-related cost cuts providing a cushion to margin. "We believe the risk to margin exists in this highly competitive industry as companies revert back to their advertising spends and other expenses in the key summer season. AC demand needs to surprise to take care of commodity price inflation worries," said Motilal Oswal Retail Research.

Commenting on the outlook, the brokerage firm said, "We believe the recent market price adequately factors in franchise strength of the UCP business. We note that a large part of the margin surprise is due to cut in ad spends and low-cost inventory that was procured last year.

We increase our FY21E/FY22E/FY23E EPS estimate by 5%/11%/15% owing to the strong performance in 3QFY21 and maintain our Neutral rating with a TP of Rs 1,125/share (FY23E target P/E for the UCP business at 55x).

While VOLT remains our preferred play in the underpenetrated AC industry in India. Valuations are expected to remain elevated going into the summer season, with high expectations as well as likely announcement of a detailed PLI scheme for the AC industry."

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.

 



 Post Comment
Name Email
Comment
Security Code type    into this box
Related Articles
IDBI Capital maintains Buy on HDFC Bank with target price of Rs 1,740 - 21-Apr-2021 15:13
Prestige Estates Projects acquires stake in two partnership firm - 21-Apr-2021 14:55
Jubilant Pharmova arm completes studies using novel oral formulation of Remdesivir - 21-Apr-2021 14:26
Mahindra Treo Zor crosses 1,000 sales milestone - 21-Apr-2021 13:23
Accumulate Infosys; target price of Rs 1,505: IDBI Capital - 21-Apr-2021 12:49
Accumulate ACC; target price of Rs 2,143: IDBI Capital - 21-Apr-2021 11:31
IDBI Capital maintains Hold on Nestle with target price of Rs 16,195 - 21-Apr-2021 11:19
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer