Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Voltas (VOLT) reported very weak Q2FY12 numbers, significantly below
ours and consensus estimates. Revenue grew by a mere 5% even as PAT
(adjusted for property sale) dipped 72% with margins collapsing across all
segments. EBTIDA margin was the lowest in 25 quarters at 2.4%. The
biggest surprise came from 940bps dip in UCP margin. While the order
book declined 10% YoY to INR44.6bn, the inflow dropped 29% to
~INR4.8bn. We cut our earnings estimate for FY12E and FY13E by 31%
and 20% respectively as we trim revenues for EMPS and margins across
segments. We believe most of the negatives are already factored in at the
current level as we remain concerned over the near to medium term
outlook of the company. We maintain ‘HOLD’ with target price of INR 83.
Earnings disappoint yet again; margin lowest in 25 quarters
VOLT’s revenue reported a muted growth of 5% YoY to INR11.2bn. Earnings (adjusted
for property sales), however, dropped by 72% YoY to INR228mn as profitability
declined across segments. EBITDA declined 75% YoY to INR237mn as EBITDA margin
dropped 770bps YoY to 2.4%, its lowest in 25 quarters. EBIT margin in EMPS and UCP
collapsed by 750bps and 940bps YoY to 0.7% and 2.9% respectively. While cost
overruns in its overseas project hit margin in EMPS, UCP margin suffered due to a
combination of seasonality, inventory liquidation of inventory at lower margin and
increased costs of imports. We believe cost overruns are likely to continue through the
year in EMPS, putting pressure on margin. In UCP, given the high sensitivity of volume
and increased competitive intensity, sustainable margin could be lower going forward.
Outlook and valuations: Challenging; maintain ‘HOLD’
The business environment has become extremely challenging for VOLT across all three
segments as macro headwinds continue. New projects are hard to come in EMPS given
the slowdown and excessive competition (which are likely to keep margin under
pressure). UCP could also see a structural decline in margins. The stock is currently
trading at 14.3x and 11.4x its revised earnings for FY12E and FY13E respectively. While
the tough macro environment and negative management commentary mars outlook,
we believe most of the negatives are factored in at current level and thus maintain
‘HOLD/Sector Underperformer’ with reduced target of INR83 (earlier INR 104).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Voltas (VOLT) reported very weak Q2FY12 numbers, significantly below
ours and consensus estimates. Revenue grew by a mere 5% even as PAT
(adjusted for property sale) dipped 72% with margins collapsing across all
segments. EBTIDA margin was the lowest in 25 quarters at 2.4%. The
biggest surprise came from 940bps dip in UCP margin. While the order
book declined 10% YoY to INR44.6bn, the inflow dropped 29% to
~INR4.8bn. We cut our earnings estimate for FY12E and FY13E by 31%
and 20% respectively as we trim revenues for EMPS and margins across
segments. We believe most of the negatives are already factored in at the
current level as we remain concerned over the near to medium term
outlook of the company. We maintain ‘HOLD’ with target price of INR 83.
Earnings disappoint yet again; margin lowest in 25 quarters
VOLT’s revenue reported a muted growth of 5% YoY to INR11.2bn. Earnings (adjusted
for property sales), however, dropped by 72% YoY to INR228mn as profitability
declined across segments. EBITDA declined 75% YoY to INR237mn as EBITDA margin
dropped 770bps YoY to 2.4%, its lowest in 25 quarters. EBIT margin in EMPS and UCP
collapsed by 750bps and 940bps YoY to 0.7% and 2.9% respectively. While cost
overruns in its overseas project hit margin in EMPS, UCP margin suffered due to a
combination of seasonality, inventory liquidation of inventory at lower margin and
increased costs of imports. We believe cost overruns are likely to continue through the
year in EMPS, putting pressure on margin. In UCP, given the high sensitivity of volume
and increased competitive intensity, sustainable margin could be lower going forward.
Outlook and valuations: Challenging; maintain ‘HOLD’
The business environment has become extremely challenging for VOLT across all three
segments as macro headwinds continue. New projects are hard to come in EMPS given
the slowdown and excessive competition (which are likely to keep margin under
pressure). UCP could also see a structural decline in margins. The stock is currently
trading at 14.3x and 11.4x its revised earnings for FY12E and FY13E respectively. While
the tough macro environment and negative management commentary mars outlook,
we believe most of the negatives are factored in at current level and thus maintain
‘HOLD/Sector Underperformer’ with reduced target of INR83 (earlier INR 104).
No comments:
Post a Comment