Exposure to the Middle East market helped Voltas perform well: Dipen Shah

In a chat with ET Now, Dipen Shah, Sr. VP-Private Client Group Research, Kotak Securities, shares his views on Voltas Ltd. Excerpts:

ET Now: What is the deal with Voltas? This is an engineering company. The fortunes of Voltas are completely linked to the fortunes of Indian economy. If Indian economy is struggling, why is Voltas as a stock doing exceptionally well?

Dipen Shah: Yes, Voltas is an engineering company which is partly dependent on the Indian economy, but if we have to look at the business model, then the company is also exposed to a certain extent to the Middle East market where we are seeing that the company is receiving significantly good number of orders because the Middle East market is recovering after three to four years of a lull.

If you look at the near term performance specifically the quarter, the air conditioning business was the one which actually gave a very big positive surprise. The revenues growth in that was about 40 per cent if I am not wrong and if we compare it to peers like a Blue Star, the results in the air conditioning business were significantly better.

Plus the export business in the Middle East is performing very well and also Voltas we have been preferring for quite sometime largely because of the fact that it is one of the few companies which has a strong balance sheet, it has got net cash to the extent of about Rs 25 to Rs 30 per share and that is something which will come handy even if the economy continues to perform poorly. So yes, Voltas has been a pick for us and we continue to be positive on the stock.