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Voltas has released a business outlook and itself terms the outlook a mixed bag. The key is the
projects business where the company has admitted margins may remain under pressure in the
international segment. The engineering products and the unitary cooling businesses are expected
to do well on an overall basis.
In the Electromechanical Projects and Services (EMP) segment, the company is seeing a
higher level of enquiries coming from customers and finds the outlook encouraging. Current
domestic order book is Rs16bn
Since the company is seeing higher business from infrastructure and industrial space, its
profile is that of a subcontractor to the main contractor resulting in receivable cycle getting
elongated and hence higher working capital needs.
On the international side the company clarified that Abu Dhabi and Qatar where the company
has most of its business is unlikely to be impacted by the disturbances in the Middle East,
though it admitted some of the new territories they are looking at could be sensitive. Current
international order book is Rs31bn.
Company expects better order flow in international in 2HFY12, as it believes the competitive
situation in the Middle East could subside by then.
However, it warns margins may remain under pressure though it still looks at initial order
booking margins of 5-7%
Losses from Rohini Electricals would continue in 4QFY11 as certain large projects have
margin issues. However that should be the end and the company expects to start FY12 on a
clean slate
In the Engineering Products and Services (EPS), the company expects it to do well on overall
basis, while the unitary cooling products segment is expected to grow 25%yoy.
We continue to maintain our Sell rating. Stock trades at 15.5xFY12F
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Voltas has released a business outlook and itself terms the outlook a mixed bag. The key is the
projects business where the company has admitted margins may remain under pressure in the
international segment. The engineering products and the unitary cooling businesses are expected
to do well on an overall basis.
In the Electromechanical Projects and Services (EMP) segment, the company is seeing a
higher level of enquiries coming from customers and finds the outlook encouraging. Current
domestic order book is Rs16bn
Since the company is seeing higher business from infrastructure and industrial space, its
profile is that of a subcontractor to the main contractor resulting in receivable cycle getting
elongated and hence higher working capital needs.
On the international side the company clarified that Abu Dhabi and Qatar where the company
has most of its business is unlikely to be impacted by the disturbances in the Middle East,
though it admitted some of the new territories they are looking at could be sensitive. Current
international order book is Rs31bn.
Company expects better order flow in international in 2HFY12, as it believes the competitive
situation in the Middle East could subside by then.
However, it warns margins may remain under pressure though it still looks at initial order
booking margins of 5-7%
Losses from Rohini Electricals would continue in 4QFY11 as certain large projects have
margin issues. However that should be the end and the company expects to start FY12 on a
clean slate
In the Engineering Products and Services (EPS), the company expects it to do well on overall
basis, while the unitary cooling products segment is expected to grow 25%yoy.
We continue to maintain our Sell rating. Stock trades at 15.5xFY12F
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