Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We met the senior management of Voltas (VOLT) today. The company
indicated that tough times persist across segments. In the international
EMPS business, while few pockets like Dubai are seeing some revival in
order flows, other larger areas continue to face delays in project
finalisation. Owing to extended winter, volumes and margins in the UCP
business are expected to remain under pressure during Q4FY12. We
maintain ‘HOLD’ with target price at INR112.
Paucity of new orders in EMPS; Rohini breakeven postponed
After spike in order inflow in Q3FY12, VOLT faces delays in new orders from its
international business even as the order pipeline remains strong over the next 2‐3
years. To combat increased competition, VOLT has started to bid in consortium (for
larger projects), thus improving its chances of bagging orders at stable margins.
Domestic business, though small, is better margin with increased focus on water
business. Rohini Electricals’ breakeven is postponed by a year to end‐FY13.
Extended winter cools revenues in UCP; macros affect EPS
In UCP, while Q4FY12 is expected to be impacted due to extended winter, the company
is unlikely to offer discounts towards inventory liquidation. UCP, however, could spring
surprise in case of an extended summer. VOLT continues to face uncertainty / macro
headwinds in its EPS segments, which we believe is likely to suppress growth.
Outlook and valuations: Challenging times; maintain ‘HOLD’
Business environment remains challenging across the three segments. International
EMPS business faces delays in project awards even as competition remains strong,
affecting margin. Domestic EMPS margins are a tad higher. UCP margin will remain
under pressure due to competition. We marginally raise our earnings for FY13E and
FY14E by 6% as we raise EMPS margin. The stock is trading at 12.0x its FY13 earnings.
We believe most of the negatives are factored in at current level and maintain ‘HOLD/
Sector Performer’ with target price of INR112 (earlier INR105).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We met the senior management of Voltas (VOLT) today. The company
indicated that tough times persist across segments. In the international
EMPS business, while few pockets like Dubai are seeing some revival in
order flows, other larger areas continue to face delays in project
finalisation. Owing to extended winter, volumes and margins in the UCP
business are expected to remain under pressure during Q4FY12. We
maintain ‘HOLD’ with target price at INR112.
Paucity of new orders in EMPS; Rohini breakeven postponed
After spike in order inflow in Q3FY12, VOLT faces delays in new orders from its
international business even as the order pipeline remains strong over the next 2‐3
years. To combat increased competition, VOLT has started to bid in consortium (for
larger projects), thus improving its chances of bagging orders at stable margins.
Domestic business, though small, is better margin with increased focus on water
business. Rohini Electricals’ breakeven is postponed by a year to end‐FY13.
Extended winter cools revenues in UCP; macros affect EPS
In UCP, while Q4FY12 is expected to be impacted due to extended winter, the company
is unlikely to offer discounts towards inventory liquidation. UCP, however, could spring
surprise in case of an extended summer. VOLT continues to face uncertainty / macro
headwinds in its EPS segments, which we believe is likely to suppress growth.
Outlook and valuations: Challenging times; maintain ‘HOLD’
Business environment remains challenging across the three segments. International
EMPS business faces delays in project awards even as competition remains strong,
affecting margin. Domestic EMPS margins are a tad higher. UCP margin will remain
under pressure due to competition. We marginally raise our earnings for FY13E and
FY14E by 6% as we raise EMPS margin. The stock is trading at 12.0x its FY13 earnings.
We believe most of the negatives are factored in at current level and maintain ‘HOLD/
Sector Performer’ with target price of INR112 (earlier INR105).
No comments:
Post a Comment