Bank of America retains the 'Buy' rating on Voltas
Bank of America retains the 'Buy' rating on Voltas and raises the target price to Rs 240, as the stock could re-rate to a PE of 16x FY12E driven by: (1) rising outlook of residential AC market; and (2) cyclical upturn in project business.
By ET Bureau |
Voltas
Research: Bank of America
Rating: Buy
CMP: Rs 207
Bank of America retains the 'Buy' rating on Voltas and raises the target price to Rs 240, as the stock could re-rate to a PE of 16x FY12E driven by: (1) rising outlook of residential AC market; and (2) cyclical upturn in project business. Voltas, as the second-largest AC company in India, with about 18% share, is a key beneficiary of the extremely strong demand growth being seen in room air-conditioners. Voltas is increasing its presence from four countries to seven countries to maximise growth.
It is also expanding its presence in water treatment and industrial electricals to boost sales. Voltas suffered from excess demand for room ACs in April-June 2010, as it had to source components on short notice and, hence, at higher cost. An increase in margins in the engineering product segment (15% of FY10E profit), owing to stronger growth of textile and mining equipment having higher margins, could partly offset cost pressure.
Research: Bank of America
Rating: Buy
CMP: Rs 207
Bank of America retains the 'Buy' rating on Voltas and raises the target price to Rs 240, as the stock could re-rate to a PE of 16x FY12E driven by: (1) rising outlook of residential AC market; and (2) cyclical upturn in project business. Voltas, as the second-largest AC company in India, with about 18% share, is a key beneficiary of the extremely strong demand growth being seen in room air-conditioners. Voltas is increasing its presence from four countries to seven countries to maximise growth.
It is also expanding its presence in water treatment and industrial electricals to boost sales. Voltas suffered from excess demand for room ACs in April-June 2010, as it had to source components on short notice and, hence, at higher cost. An increase in margins in the engineering product segment (15% of FY10E profit), owing to stronger growth of textile and mining equipment having higher margins, could partly offset cost pressure.
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