14 August 2014
1QFY15 Results Update | Sector:
Capital Goods
Voltas
BSE SENSEX
26,103
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
7,792
VOLT IN
330.9
73.0/1.2
233/63
6/57/167
CMP: INR221
TP: INR262
Buy
Results beat expectations, estimates revised
Performance above estimates, project business reports constrained margins:
VOLT booked revenue of INR17.5b, up 10% YoY, against an estimate of INR16.3b.
Improvement in revenue was aided by 27% YoY increase in unitary cooling
business revenue. EBITDA for 1QFY15 increased 2.2x YoY at INR1.6b v/s an
estimate of INR1.1b. Hence, PAT increased 2.7x on a YoY basis at INR1.1b.
Project business reports constrained margins; book-to-bill ratio at 1.3x:
Project
business reported revenue of INR6.2b, down 10% YoY, for 1QFY15. However, with
an EBIT of INR44m, project business continues to report constrained margins
(1QFY15 EBIT 0.7% v/s -3.8% in 1QFY14 and -2% in 4QFY14). Legacy projects
continue to be a part of the order backlog; 1QFY15 order inflows at INR6.9b.
Unitary cooling division maintains market leadership:
Unitary cooling division
reported robust performance for 1QFY15, with revenue of INR10.1b, up 27% YoY.
Aided by higher volume offtake, EBIT margin in unitary cooling segment improved
300bp for 1QFY15 at 11.6% v/s 8.6% in 1QFY14. Volume offtake in this segment
can be attributed to prolonged, intense and volatile climatic conditions.
Valuation and view:
At CMP of INR221, VOLT trades at 23.3x/18.6x FY15E/FY16E
EPS of INR9.5/11.9. Post the robust performance reported in 1QFY15, we model
revenue/PAT CAGR of 11%/33% for the period FY14-16E. Maintain
Buy
with a
revised target price of INR262.
Financials & Valuation (INR Million)
Y/E Mar
Net Sales
EBITDA
Adj PAT
EPS (INR)
Gr. (%)
BV/Sh(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
2015E 2016E 2017E
56,918 65,332 76,146
3,700
3,129
9.5
34
62
16.2
15.7
23.3
3.6
4,738
3,933
11.9
26
70
18.1
18.3
18.6
3.2
5,998
4,928
14.9
25
80
19.8
20.7
14.8
2.7
Satyam Agarwal
(AgarwalS@MotilalOswal.com); +91 22 3982 5410
Amit Shah
(Amit.Shah@MotilalOswal.com)
/
Nirav Vasa
(Nirav.Vasa@MotilalOswal.com)
Investors are advised to refer through disclosures made at the end of the Research Report.