With continuous improvement in operating performance, we expect a healthy up side in the near-term too. We continue to maintain Buy with target price of Rs 680.
Anand Rathi
Voltas being a strong brand in the room air conditioner (RAC) segment has maintained its market leadership position in India despite rising competition.
With a commanding Q2 FY19 25.6% market share, Voltas is number one in room A/Cs. It has the widest range of inverter A/Cs, well equipping it to cater to the rising shift (40% of split AC sales).
Voltas, having the largest distribution network (15,000+ touch points) among pure A/C players, and Beko’s comprehensive product range are expected to be a favourable combination, aiding growth prospects.
The Rs 1.64 billion H1 FY19 EMP EBIT (Rs 655m a year ago) reflected a 390bp margin expansion to 9.3%, backed by strong, 45%, revenue growth to Rs 17.68 billion. Margin expansion is attributable to superior project selection and astute execution.
Improving operations combined with a healthy (and geographically diversified) order book of Rs 48.83 billion, offers ample assurance for the next two years.
With continuous improvement in operating performance, we expect a healthy up side in the near-term too. We continue to maintain Buy with target price of Rs 680.
The Joint Venture Company, Voltbek, will be launching new products in refrigerators, washing machines, micro waves and other white goods/domestic appliances under the brand name of Voltas-Beko. There will be a capacity of 1 mn refrigerators and washing machines and 0.5mn micro wave ovens.
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