Reduce Voltas, target Rs 510: Elara Capital

Elara Capital has a reduce call on Voltas Ltd. with a target price of Rs 510. The current market price of Voltas Ltd. is Rs 518.25 Time period given by the brokerage is a year when Voltas Ltd. price can reach defined target. Voltas Ltd., incorporated in 1954, is a largecap company with a market cap of Rs 17151.41 crore.

Investment rationale by Elara Capital

We cut our earnings by 2% in FY19E and FY20E on weak summer season. But, we retain our TP at INR 510 as we roll forward by a quarter to 25x (unchanged) June 2020 P/E. We revise to Reduce from Sell as the stock has underperformed BSE Sensex by 27% in the past six months. We expect an earnings CAGR of 8% over FY18-21E (vs 18% over FY15-18) and an average ROE of 15% over FY19-21E (vs 16% over FY16-18 and 14% over FY13-15).