Voltas - Earnings Twinge; Accumulate ::Emkay

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Voltas

Earnings Twinge; Accumulate

Accumulate

CMP: Rs 134                                       Target Price: Rs 165

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n     Voltas disappoints with 23% yoy decline in APAT to Rs0.8 bn – EMP segment (EBIT margin down 390 bps yoy to 4.6%). UCP shows 200 bps margin expansion offsets 4% revenue decline

n     Order inflows dry out - secures orders worth Rs2 bn. Order book down 7% qoq to Rs45.5 bn

n     Downgrade earnings by 18% for FY12E and 17% for FY13E – revise margin expectation in international projects. Key upside risk to earnings is decline in commodity price

n     Factored possible events in earnings forecasts, but further downplay in macro environment remains key downside risk - Downgrade one notch to ACCUMULATE to Rs165/Share