Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Voltas: Results disappoint across the board
Voltas (VOLT)
Industrials
Results disappoint across the board. Voltas reported disappointing revenues (down
4% yoy) and EBITDA margins (down 120 bps yoy). The disappointment was witnessed
broadly across the board led by the EMP segment (revenues down 2.5% yoy with a 400
bps decline in EBIT margins). Sedate revenues and margin contraction led to a net PAT
decline of 23% yoy to Rs728 mn. Backlog declined by 7% sequentially to Rs45.5 bn
implying weak inflows of only Rs3.4 bn in 1QFY12. Retain ADD (revised TP: Rs150).
Revenue disappoints/declines across segments; margins also dip across segments apart from UCP
Voltas reported 1QFY12 net revenues of Rs13.5 bn, 11.7% below our estimate and down 4.4%
yoy. The revenues disappointed across segments led by the EMP segment. EBITDA margin of 7.9%
was down 120 bps yoy (from 9.1% in 1QFY11) versus our expectations of flat margins. The
decline was primarily on sharp fall in margins of the EMP segment (partly offset by margin
expansion in the UCP segment). Sedate revenues and margin decline led to a net PAT of Rs728 mn,
down 23% yoy and about 25% below our estimate. Voltas reported an exceptional income of
Rs815 mn (post-tax income of about Rs595 mn) on transfer of materials handling business.
EMP leads revenue as well as margin disappointment; other segments also disappointing
Electro-Mechanical Projects (EMP) revenues (2.5%) and margins (400 bps, broadly half
of last year) decline. EMP segment led the revenue as well as margin disappointment for the
quarter. Revenues declined by 2.3% yoy, about 15% below estimates and EBIT margin
recorded a steep contraction to 4.6% in 1QFY12 versus about 8.3% a year ago.
Unitary Cooling Products (UCP) (revenues down 5%, though margins expand 200 bps).
This segment reported a revenue decline of about 4.1% yoy versus our expectation of flat yoy
revenues. The margins, however, recorded a 200 bps yoy expansion to 11.3% for the quarter.
Engineering products and services. This segment also reported disappointing revenues
(down 19% yoy) as well as profitability (EBIT margin down 540 bps yoy). However, the yoy
numbers are not comparable as the company sold its materials handling business in the quarter.
EMP backlog of Rs45.5 bn implies weak inflows (of only about Rs3.4 bn) during the quarter
Voltas reported 1QFY12-end EMP segment order backlog of Rs45.5 bn, a decline of 9% yoy and
6.9% sequentially. The backlog implies weak inflows to the tune of about Rs3.4 bn in 1QFY12,
significantly lower than 1QFY11 inflows of Rs10 bn and FY2011 quarterly average of Rs58 bn.
Revise earnings estimates and target price to Rs150/share; retain ADD
Revise estimates to Rs9.6 and Rs10.5 (from Rs11.1 and Rs12.3) for FY2012E and FY2013E. We
revise our TP to Rs150 (from Rs185) on lower estimates and target multiple of 14X FY2013E EPS
(from 15X earlier). Retain ADD as valuations appear reasonable despite relatively low assumptions.
Cut estimates, TP to Rs150; retain ADD on reasonable valuations on conservative
estimates
We have revised our earnings estimate to Rs9.6 and Rs10.5 for FY2012E and FY2013E based
on lower revenue and margin assumptions across most segments. Key segment-wise
changes to our assumptions include:
Electro-Mechanical Projects. Lower order inflow growth assumption (of 10% decline
versus flat yoy earlier) is leading to 7% lower revenues in FY2013E. We have also
marginally revised our EBIT margin assumption to about 7-7.5% for FY2012-13E versus
8% earlier.
Unitary Cooling Products. Lower revenue growth assumption of 7.2% and 14.1% in
FY2012E and FY2013E, respectively versus previous assumption of 18-18.5% growth in
both years. EBIT margin assumptions broadly remain unchanged at 9.5-10%.
Engineering products and services. Lower revenues (by about 25%) were recorded on
the back of adjustment for material handling business. EBIT margin assumption remains
unchanged at 17.5%.
We have correspondingly cut our target price to Rs150/share (from Rs185/share earlier)
based on (1) 14% downward revision to FY2013E earnings estimates and (2) revision in
target multiple to 14X FY2013E EPS from 15X earlier based on slow demand environment
across segments.
We retain our ADD rating on the stock as the stock is currently trading at reasonable
valuations of 12.8X FY2013E earnings despite building very low expectations into our
estimates. We highlight that Voltas maintains strong focus on working capital, cash
generation giving us further comfort on valuation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Voltas: Results disappoint across the board
Voltas (VOLT)
Industrials
Results disappoint across the board. Voltas reported disappointing revenues (down
4% yoy) and EBITDA margins (down 120 bps yoy). The disappointment was witnessed
broadly across the board led by the EMP segment (revenues down 2.5% yoy with a 400
bps decline in EBIT margins). Sedate revenues and margin contraction led to a net PAT
decline of 23% yoy to Rs728 mn. Backlog declined by 7% sequentially to Rs45.5 bn
implying weak inflows of only Rs3.4 bn in 1QFY12. Retain ADD (revised TP: Rs150).
Revenue disappoints/declines across segments; margins also dip across segments apart from UCP
Voltas reported 1QFY12 net revenues of Rs13.5 bn, 11.7% below our estimate and down 4.4%
yoy. The revenues disappointed across segments led by the EMP segment. EBITDA margin of 7.9%
was down 120 bps yoy (from 9.1% in 1QFY11) versus our expectations of flat margins. The
decline was primarily on sharp fall in margins of the EMP segment (partly offset by margin
expansion in the UCP segment). Sedate revenues and margin decline led to a net PAT of Rs728 mn,
down 23% yoy and about 25% below our estimate. Voltas reported an exceptional income of
Rs815 mn (post-tax income of about Rs595 mn) on transfer of materials handling business.
EMP leads revenue as well as margin disappointment; other segments also disappointing
Electro-Mechanical Projects (EMP) revenues (2.5%) and margins (400 bps, broadly half
of last year) decline. EMP segment led the revenue as well as margin disappointment for the
quarter. Revenues declined by 2.3% yoy, about 15% below estimates and EBIT margin
recorded a steep contraction to 4.6% in 1QFY12 versus about 8.3% a year ago.
Unitary Cooling Products (UCP) (revenues down 5%, though margins expand 200 bps).
This segment reported a revenue decline of about 4.1% yoy versus our expectation of flat yoy
revenues. The margins, however, recorded a 200 bps yoy expansion to 11.3% for the quarter.
Engineering products and services. This segment also reported disappointing revenues
(down 19% yoy) as well as profitability (EBIT margin down 540 bps yoy). However, the yoy
numbers are not comparable as the company sold its materials handling business in the quarter.
EMP backlog of Rs45.5 bn implies weak inflows (of only about Rs3.4 bn) during the quarter
Voltas reported 1QFY12-end EMP segment order backlog of Rs45.5 bn, a decline of 9% yoy and
6.9% sequentially. The backlog implies weak inflows to the tune of about Rs3.4 bn in 1QFY12,
significantly lower than 1QFY11 inflows of Rs10 bn and FY2011 quarterly average of Rs58 bn.
Revise earnings estimates and target price to Rs150/share; retain ADD
Revise estimates to Rs9.6 and Rs10.5 (from Rs11.1 and Rs12.3) for FY2012E and FY2013E. We
revise our TP to Rs150 (from Rs185) on lower estimates and target multiple of 14X FY2013E EPS
(from 15X earlier). Retain ADD as valuations appear reasonable despite relatively low assumptions.
Cut estimates, TP to Rs150; retain ADD on reasonable valuations on conservative
estimates
We have revised our earnings estimate to Rs9.6 and Rs10.5 for FY2012E and FY2013E based
on lower revenue and margin assumptions across most segments. Key segment-wise
changes to our assumptions include:
Electro-Mechanical Projects. Lower order inflow growth assumption (of 10% decline
versus flat yoy earlier) is leading to 7% lower revenues in FY2013E. We have also
marginally revised our EBIT margin assumption to about 7-7.5% for FY2012-13E versus
8% earlier.
Unitary Cooling Products. Lower revenue growth assumption of 7.2% and 14.1% in
FY2012E and FY2013E, respectively versus previous assumption of 18-18.5% growth in
both years. EBIT margin assumptions broadly remain unchanged at 9.5-10%.
Engineering products and services. Lower revenues (by about 25%) were recorded on
the back of adjustment for material handling business. EBIT margin assumption remains
unchanged at 17.5%.
We have correspondingly cut our target price to Rs150/share (from Rs185/share earlier)
based on (1) 14% downward revision to FY2013E earnings estimates and (2) revision in
target multiple to 14X FY2013E EPS from 15X earlier based on slow demand environment
across segments.
We retain our ADD rating on the stock as the stock is currently trading at reasonable
valuations of 12.8X FY2013E earnings despite building very low expectations into our
estimates. We highlight that Voltas maintains strong focus on working capital, cash
generation giving us further comfort on valuation.
No comments:
Post a Comment