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Voltas - Q4FY21 first cut: All round beat with strong operating performance led by EMPS segment - YES Securities

Posted On: 2021-05-16 06:44:29 (Time Zone: UTC)

Result summary - Consolidated revenue growth beat estimates on strong execution of projects; UCP and Engineering products and services business delivered in line performance. Revenue/EBITDA/PAT grew 26.9%/72.2%/49.7%.

Margins - Gross margin contracted sharply by 306bps yoy to 25.6% on higher input costs. Gross margin are expected to remain under pressure as a result of input cost increase on back of increased components and commodity prices. Strong control on employee and other operating expenses have led to expansion in EBITDA margin. EBITDA margin expanded by 328bps yoy to 12.5%.

UCP: Revenue grew 19.8% yoy in line with estimates. Cooling products registered volume growth of 18%. Air-cooler continues to see strong growth momentum. Voltas has further consolidated its second position and now commands market share of 10.6% in air-coolers. On RAC front market share stands at 25.6% up 140bps yoy but sequentially it is lower by 40bps.

EMPS Revenue grew 37.2% yoy, 24% higher than estimates indicating improvement in execution on better macro-economic conditions. EBIT margin in EMPS stood at 8.4% expansion of 701bps yoy. Sharp improvement in margin on yoy basis is on back of improved efficiencies & execution and absence of conservative time based provisioning during the quarter.

EPS: Revenue grew 3% in line with estimates with EBIT margin of 34.6%.

Other Highlights: 1) Losses from JV has increased to Rs222mn indicating higher losses from its Volt-Bek JV. 2) Gross debt stood at Rs2606mn; while net cash stood at Rs4475mn. 3) Net working capital days has deteriorated to 33 days vs 27 days in 4QFY20. This deterioration is on back of reduction in payable days. Payable days has decreased to 116 days vs 130 days in 4QFY20.

Our view - Voltas has surpassed estimates both on revenue and profitability led by significant improvement in EMPS business, however on the RAC has grown in line with estimates. The stock has already seen a significant re-rating. We continue our positive stance on the stock and will revisit our estimates post the earnings call.

Shares of VOLTAS LTD. was last trading in BSE at Rs.999.75 as compared to the previous close of Rs. 970.55. The total number of shares traded during the day was 151540 in over 4422 trades.

The stock hit an intraday high of Rs. 1040 and intraday low of 963.7. The net turnover during the day was Rs. 150255705.

Source: Equity Bulls

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