Prabhudas Lilladher placed a BUY call on Voltas Limited, a midcap Tata Group company. In India, Voltas Limited has been in business for six decades and specialises in air conditioning and cooling technology. The business is essentially divided into projects and products. Domestic Projects Group (DPG) and International Operations Business Group (IOBG) are two categories for the projects business. The Unitary Products Business Group (UPBG), Mining & Construction Equipment Division (MCED), and Textile Machinery Division are the three divisions that make up the products business (TMD).
Stock Outlook & Returns
The stock of Voltas on NSE last traded at Rs 858.45 per share, 0.37% up from its previous close. The current market price is 6.83% up from its 52-week low. Its 52-week low recorded on 21 November 2022 at Rs 803.60 and the stock recorded its 52 week high on 7 April 2022 at Rs 1,347.65, respectively.
In a week the shares surged by 2..27%, whereas, in 3 months fallen by 13.05%. In the past 1 year, the stock has fallen 31.14%. In 3 years, it has given 23.26% positive returns. In 5 years it gave a 38.25% positive return to shareholders.
Vikram Kasat - Head Advisory - Prabhudas Lilladher Pvt Ltd said, Voltas continues to be the market leader and has sustained its No.1 position in the overall Room Air conditioner business with its YTD August 2022 market share at 22.8% with the lead of close to 750 bps over 2nd player. The leadership position and expanding difference between top two players, augers well for Voltas.
Voltas has planned capex of Rs 3.5-4bn under PLI scheme to strengthen its domestic manufacturing. The company has also formed a JV with Highly international, to design, develop, manufacture and sell inverter compressors, which we believe will further benefit the company to gain market share and increase its revenue.
In project business, domestic projects business witnessed a better traction in order booking including potential orders in pipeline during Q2FY23 aggregating to INR9.5bn. The collective efforts towards project monitoring, execution of the projects and intense focus on the collection has supported the results for the domestic projects group. We believe, the project business to recover from here in terms of growth and margins.
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