Buy Voltas Ltd - PINC Result Review

Voltas Ltd's Q1FY11 results were in-line with our expectation as net sales grew by 12.7% YoY to Rs14.1bn as against our estimate of Rs13.4bn. OPM expanded by 23bps to 9.1% due to higher commission income. Adjusted net profit rose by 22.2% to Rs937mn (our estimate was Rs907mn) driven by improved margins and higher other income.

VALUATIONS AND RECOMMENDATION

We maintain our earning estimates for FY11 and FY12. At the CMP of Rs207, the stock trades at a P/E of 18.5x & 15.6x and an EV/EBITDA of 10.7 & 8.9x its FY11E and FY12E estimates respectively. We are positive on Voltas and expect good order inflows in the coming quarters. We maintain our 'BUY' recommendation with an increased target price of Rs239 (18x FY12E EPS).

Source : Equity Bulls

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