This Midcap Tata Stock Can Leap To Rs 973, Top Brokerage Upgrades To “Buy”

Anand Rathi has recommended buying the stock of Tata Group company Voltas and believes the stock can rally to 973, which is a 22% upside from current levels.

Margins a tad soft for Voltas

According to Anand Rathi, despite 20% y/y growth in FY23 revenue, higher material costs weighed on EBITDA margins. One-offs led to its FY23 net income dropping to a nadir.

"The falling market share in room A/Cs amid stiff and mounting competition is still a major concern. However, the 52% y/y higher projects OB is a positive. Earnings are expected to normalise in FY24 after reaching a nadir in FY23. We upgrade the stock to a Buy," the brokerage has said.

The outlook for UCP segment is bright, aided by mounting demand for room air-conditioners and commercial cooling products, Anand Rathi has noted.

"Prospects for the project's business appear bright considering strong order book. Timely execution is the key to margins, which dipped in FY23. Post-FY23 results, we have raised our FY24e/FY25erevenue/net income an average of 4%/11%. We upgrade the stock to a Buy, with a 12-month target price of Rs 973 as we value each business and the JV with Beko separately. At the current market price, the stock quotes at 52x/37x the FY24e/FY25e EPS of Rs 15.5/22.1," the brokerage has noted.

Market share in room A/Cs reaches a low 21.9%. Voltas' market share in room A/Cs at end-Feb'23 had reached a low 21.9% (it has been dropping since Q1FY22). Unseasonal rainfall affected volume offtake in Mar'23, which is expected to pick up in Q1FY24. This is an important monitorable, Anand Rathi has said.

Disclaimer

Please note, we have highlighted the stock recommended by Anand Rathi and this is not a recommendation of the author, nor Greynium Information technologies Pvt Ltd. This article is information and we have not done any fundamental analysis. Neither the broking firm, nor the author nor Greynium Information Technologies Pvt Ltd would be responsible for losses caused from a decision in this article.