Buy Voltas\, target price Rs 700: Motilal Oswal

Motilal Oswal has given buy rating to Voltas with a target price of Rs 700. The share price moved up by 1.26 per cent from its previous close of Rs 628.70. The stock’s last traded price is Rs 636.65.

Voltas Ltd., incorporated in the year 1954, is a Large Cap company (having a market cap of Rs 21080.67 Crore) operating in Consumer Durables sector.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 1270.76 Crore, down 38.86 % from last quarter Sales of Rs 2078.39 Crore and down -51.99 % from last year same quarter Sales of Rs 2646.67 Crore Company has reported net profit after tax of Rs 93.45 Crore in latest quarter.

Investment Rationale
The brokerage expects system-level inventory to normalize by Nov–Dec’20; hence, FY22E should turn out to be a normal year. It has cut FY22 EBITDA estimates by 5% as it has lowered margin estimate in the Projects business to model-in some conservatism. It has increased multiple for the UCP segment to 40x from 35x earlier owing to its relative outperformance v/s white goods companies. Voltas remains the preferred play in the underpenetrated AC industry in India.

Promoter/FII Holdings
Promoters held 30.3 per cent stake in the company as of June 30, 2020, while FIIs held 10.7 per cent, DIIs 39.3 per cent and public and others 19.7 per cent.