INSUBCONTINENT EXCLUSIVE:
Phillip Capital (India) has a buy call on Voltas with a target price of Rs 500.
The current market price of Voltas is Rs 530.70.
Time period
given by the analyst is one year when Voltas price can reach the defined target
Investment rationale by the brokerage: Current valuations at 27x PE FY20E still look expensive in view of a 9 per cent CAGR in FY18-21
earnings and start-up losses in the Voltbek JV, which will have to find its footing in the consumer appliances segment
In the near term, we expect concerns on the performance of the AC business to be reflected in valuations between now and 1QFY20 results
For now, we maintain our Neutral rating with a modestly lower SOTP based target price of Rs 500 (Rs 510 earlier)
respectively, and Rs 11/share for unallocated income
We have cut our FY19/20 estimates by 11 per cent to factor in a weaker AC business and higher losses in the Voltbek JV.
