Sell Voltas, target price Rs 455: Kotak Institutional Equities

Kotak Institutional Equities has maintained sell rating on Voltas and cut target price to Rs 455 from Rs 500. The stock ended up 0.75 per cent at Rs 503.55 on Wednesday while the BSE Sensex closed 742.84 points up (+2.42 per cnet) at 31,379.55.

Voltas Ltd., incorporated in 1954, has a market cap of Rs 16661.70 crore.



Investment Rationale

Covid-19-related lockdowns will have a significant impact on Voltas’ FY21 revenues, particularly as retail outlets remain closed in the seasonally strong June quarter, said Kotak Institutional. Voltas remains a long-term play on India’s underpenetrated AC market but current valuations factor in these positives, it said.

Financials

Voltas Ltd. key Products/Revenue Segments include Electrical Goods which contributed Rs 3631.08 crore to sales value (54.25 per cent of total sales); Contract Revenue which contributed Rs 2483.72 crore to sales value (37.10 per cent of total sales); Sale of services which contributed Rs 543.48 crore to sales value (8.11 per cent of total sales); Other Operating Revenue which contributed Rs 29.26 crore to sales value (0.43 per cent of total sales) and Scrap which contributed Rs 5.65 crore to sales value (0.08 per cent of total sales)for the year ending March 31, 2019.

For the quarter ended December 31, 2019, the company reported consolidated sales of Rs 1487.07 crore, up 5.09 per cent from last quarter sales of Rs 1415.02 crore and up .22 per cent from last year same quarter sales of Rs 1483.85 crore Company has reported net profit after tax of Rs 106.68 crore in the latest quarter.

Promoter/FII Holdings

Promoters held 30.30 per cent stake in the company as of third quarter ending December 31, 2019, while FIIs held 10.91 per cent, DIIs 37.14 per cent and public & others 20.20 per cent.