Add Voltas, target price Rs 1,775: HDFC Securities

HDFC Securities has an add call on Voltas with a target price of Rs 1,775. The current market price of the stock is Rs 1,650. Voltas, incorporated in 1954, is a Large Cap company with a market cap of Rs 54579.44 crore, operating in Consumer Durables sector.

Voltas' key products/revenue segments include Electrical Goods, Sale of services, Contract Revenue, Other Operating Revenue and Scrap for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 2724.58 crore, down -45.52 % from last quarter Total Income of Rs 5001.27 crore and up 15.27% from last year same quarter Total Income of Rs 2363.73 crore. The company has reported net profit after tax of Rs 165.09 crore in latest quarter.

Investment Rationale
Voltas has taken 3-4%/2.5-3% price hike during Q2 in RAC/WM & Refs to cover for recent spike in raw material prices. EMPS segment execution was impacted by incessant rains. However, margins improved to 5% with a focus on projection completion, receivable collection and other project management initiatives. Voltas Beko (Voltbek) is scaling up well (1HFY25 volumes up 50%+) and remains on track to achieve EBITDA break-even by end of FY25/early FY26. HDFC Securities retains its estimates and values the stock on a SOTP basis (UCP: 50x Sep?26 EPS) to arrive at a target price of Rs 1,775. The brokerage maintain ADD call.

Promoter/FII Holdings
Promoters held 30.3 per cent stake in the company as of 30-Sep-2024, while FIIs owned 18.09 per cent, DIIs 37.15 per cent.