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UBS Investment Research
Voltas Ltd
Structural story; buy on weakness
„ Q4FY11 PAT at Rs1.0bn beats UBS and misses consensus estimates
Voltas reported PAT of Rs1bn (lower 25.7% YoY) in Q4FY11, above UBS
estimate of Rs0.9bn (lower losses in Rohini) and below consensus estimate of
Rs1.2bn. Q4FY11 result highlights were Rohini Electricals losses at Rs160mn,
lower Engineering products margins (lower commission income and costs), robust
Unitary Cooling segment performance, exceptional item of Rs77mn, and higher tax
rate. FY11 PAT is lower 6.2% due to Rs310mn of Rohini EBIT loss, shortfall of
Rs40mn from Lalbuksh and reversal on tax provision in FY10.
„ Marginally increase our estimates; maintain buy on long-term story
Based on FY11 performance, margins, and slightly better segment A performance,
we upgrade our FY12/13E estimates by 9.0/9.5%. Order flow and billing over the
next few quarters will be critical for FY12 results. We maintain Buy rating, Rs225
target price and are positive on capex outlook in MENA/India over the long-term.
„ Present in structurally strong infra markets; buy on weakness
Long-term infra focus in MENA and India, Tata management, high ROIC, net cash
balance-sheet, non-MEP business growth, Rs48.9bn order book, asset light
business model are positives. Recommend buying on weakness (potentially muted
H1FY12 order flow/billing), as risk reward looks increasingly favourable.
„ Valuation: negatives priced in; Buy rating and Rs225.00 price target
We derive our Rs 225 price target from a DCF-based methodology and explicitly
forecast long-term valuation drivers using UBS’s VCAM tool. We view any
weakness in the stock on potentially muted results, as a buying opportunity.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Voltas Ltd
Structural story; buy on weakness
„ Q4FY11 PAT at Rs1.0bn beats UBS and misses consensus estimates
Voltas reported PAT of Rs1bn (lower 25.7% YoY) in Q4FY11, above UBS
estimate of Rs0.9bn (lower losses in Rohini) and below consensus estimate of
Rs1.2bn. Q4FY11 result highlights were Rohini Electricals losses at Rs160mn,
lower Engineering products margins (lower commission income and costs), robust
Unitary Cooling segment performance, exceptional item of Rs77mn, and higher tax
rate. FY11 PAT is lower 6.2% due to Rs310mn of Rohini EBIT loss, shortfall of
Rs40mn from Lalbuksh and reversal on tax provision in FY10.
„ Marginally increase our estimates; maintain buy on long-term story
Based on FY11 performance, margins, and slightly better segment A performance,
we upgrade our FY12/13E estimates by 9.0/9.5%. Order flow and billing over the
next few quarters will be critical for FY12 results. We maintain Buy rating, Rs225
target price and are positive on capex outlook in MENA/India over the long-term.
„ Present in structurally strong infra markets; buy on weakness
Long-term infra focus in MENA and India, Tata management, high ROIC, net cash
balance-sheet, non-MEP business growth, Rs48.9bn order book, asset light
business model are positives. Recommend buying on weakness (potentially muted
H1FY12 order flow/billing), as risk reward looks increasingly favourable.
„ Valuation: negatives priced in; Buy rating and Rs225.00 price target
We derive our Rs 225 price target from a DCF-based methodology and explicitly
forecast long-term valuation drivers using UBS’s VCAM tool. We view any
weakness in the stock on potentially muted results, as a buying opportunity.
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