Buy Voltas, target Rs 420 : UBS

UBS has Buy call on Voltas Ltd. with a target price of Rs 420 . The current market price of Voltas Ltd. is 320.25 Time period given by analyst is year when Voltas Ltd. price can reach defined target.
The Voltas stock has been down 11% since demonetisation on investor concerns of sharp cut in discretionary spend. Earnings impact in Q3, H2 for FY17E and FY18E would be -12/-12% and -6/-14%, respectively. Assuming long-term growth opportunity remains intact, this indicates attractive risk-reward.
Demand down significantly in Nov, Dec; but impact on overall FY17E minimal, as Q3 is seasonally weak. Believe impact will be relatively lower for Voltas, as ~70-80% of sales comes from top 10-20 cities. Will benefit from demand recovery given market-leading position, strong distribution reach..