Voltas Ltd - Q2FY21 First Cut - ICICI Direct

(CMP: Rs. 758, MCap: Rs. 25114 crore)

Voltas reported a healthy Q2FY21 performance with topline beating our estimates.

Q2FY21 Earnings Summary

- Voltas' consolidated topline grew by ~13% YoY to ~ Rs. 1613 crore (Vs I-direct estimate: -11% YoY to ~Rs. 1261 crore) led by revenue growth in all three segments. Despite a weak season, company's UCP division sales increased by ~9% YoY to Rs. 572 crore (Vs I-direct estimate: Rs. 473 crore) led by pent up demand and rising work from home culture. Further, company reported ~15% YoY revenue growth in the Electro-mechanical and project division (EMPS) to Rs. 928 crore. Engineering & Product division sales were also up by ~16% YoY to ~ Rs. 93 crore

- UCP segment EBIT margin increased by ~223 bps YoY at 11% mainly due to various cost optimisation initiatives taken by the company amid period of lockdown. However, EBIT margin of the EMPS segment declined sharply to 2.5% from 6.9% in Q2FY20 mainly due to higher fixed cost component of the division. As a result, overall profitability (i.e EBITDA margin) during Q2FY21 declined by ~140 bps YoY at ~6.1% (Vs I-direct estimate: ~6.9%)
- PAT declined by ~26% YoY to ~Rs. 80 crore (Vs I-direct estimate: Rs. 91 crore) mainly due to lower margin and ~47% YoY decline in other income to Rs. 38 crore

We believe company's UCP division performance has remained robust in Q2FY21 given the challenging conditions of lockdowns and weak seasonal demand. Voltas continues to be the market leader with market share of 26.8% in August 2020 (Vs 26.2% in Q1FY21). This along with continue expansion in UCP division EBIT margin is encouraging. We await management commentary on sustainability of the recovery in the RAC and EMPS segment. The detailed Q2FY21 result update will be released post con-call.

Shares of VOLTAS LTD. was last trading in BSE at Rs.753.35 as compared to the previous close of Rs. 740.55. The total number of shares traded during the day was 148524 in over 5315 trades.

The stock hit an intraday high of Rs. 768 and intraday low of 734. The net turnover during the day was Rs. 111577233.

Source : Equity Bulls

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