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02 June 2020 Results Review 4QFY20
Voltas
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
UCP steals the show Voltas posted a strong set of numbers in 4QFY20 as UCP revenue/EBIT grew 20/69% yoy beating estimates. However, EMPS biz was impacted severely and saw a decline of 18% yoy, leading to consolidated revenue growth of 1% yoy. Voltas clocked strong growth of 50% yoy in its UCP volumes YTD Feb 20. Part of the growth was fuelled by expectations of a strong summer and channel concerns over supply constraints from China. Due to the heavy channel filling pre-Covid, trade inventory stands at ~60 days. Liquidation of this inventory will be a key monitorable for the co as liquidity constraints will keep channel appetite low. Market share gain of 50bps yoy to 24.2% was heartening particularly as it also become no.1 player in inverter AC (beating LG). We remain confident on Voltas’ market share gain continuity. Project execution is likely to be slower on account of stressed liquidity and labour availability issues. On account of high channel filling in 4Q and continued extended lockdown, we cut our UCP/EMPS estimates for FY21. Our EPS cut for FY21/FY22 is at 13/1% (31/25% cut in FY21/FY22 in our 4QFY20 Preview). We value Voltas on SOTP basis with an implied P/E of 28x on Mar-22E EPS, deriving a TP of Rs 551. Maintain ADD.
UCP leads the way: Con. revenue saw a growth of 1% yoy to Rs 20.9bn (HSIE -8%). UCP (58% rev) beat our estimates as it posted 20% yoy growth (-6% 4QFY19, +14% 3QFY20) vs est of 2% decline. We were also expecting strong growth in Jan/Feb for Votas UCP (20%) but co clocked 50% growth. Air coolers performance was also strong with 60% yoy growth. EMPS (39% of rev) declined by 18% yoy (+12% in 4QFY19, -8% in 3QFY20) vs expectation of 14% decline. Project work halted due to lockdown and key geographies like MENA were impacted adversely. Order book remains healthy at Rs 78bn vs Rs 50bn yoy and Rs 70bn qoq.
Robust UCP margins: UCP EBIT margins rose by 273bps yoy to 14.6% (HSIE 12%). UCP EBIT registered a growth of 69% yoy to Rs 1,754mn. EMPS EBIT margin was at 1.4% vs est of 4% (4.5% in 4QFY19 and 4.6% in 3QFY20) due to time based provisions made by the co amidst liquidity constraints. EMPS EBIT declined by 74% yoy to Rs 113mn. EBITDA increased sharply by 33% to Rs 1.9bn (HSIE Rs 1.5bn). Volt-Beko losses were at Rs 195mn vs est of Rs 131mn (Rs 193mn in 4QFY19 and Rs 187mn in 3QFY20). Lower taxes in 4QFY19 impacted APAT, up by 14% yoy to Rs 1,612mn.
Call & other takeaways: (1) Channel inventory currently stands at ~60 days, (2) Co is focusing on reducing dependence on imports, (3) Order book growth is expected to be slower due to stressed liquidity, (4) Co continues to scale Volt-beko and will drive online sales through the brand, (5) Net debt for the co improved to negative Rs 906mn from negative Rs 65mn in FY19.
Financial Summary
YE Mar (Rs mn) Q4
FY20 Q4
FY19 YoY (%)
Q3 FY20
QoQ (%)
FY19 FY20P FY21E FY22E
Net Sales 20,896 20,628 1.3 14,925 40.0 71,241 76,581 65,282 78,249 EBITDA 1,920 1,443 33.1 976 96.8 6,117 6,867 4,767 7,233 APAT 1,610 1,417 13.6 880 83.0 5,223 5,547 4,334 6,384 Diluted EPS (Rs) 4.9 4.3 13.6 2.7 83.0 15.8 16.8 13.1 19.3 P/E (x)
34.2 32.2 41.2 28.0
EV / EBITDA (x)
29.2 25.9 36.2 23.7 RoCE (%)
27.6 22.1 15.9 24.0
Source: Company, HSIE Research
ADD CMP (as on 01 June 2020) Rs 540
Target Price Rs 551
NIFTY 9,826 KEY CHANGES
OLD NEW
Rating ADD ADD
Price Target Rs 551 Rs 551
EPS % FY21E FY22E
-13% -1%
KEY STOCK DATA
Bloomberg code VOLT IN
No. of Shares (mn) 331
MCap (Rs bn) / ($ mn) 179/2,364
6m avg traded value (Rs mn) 1,073
52 Week high / low Rs 741/427
STOCK PERFORMANCE (%)
3M 6M 12M
Absolute (%) (20.5) (23.0) (7.0)
Relative (%) (7.4) (4.6) 9.2
SHAREHOLDING PATTERN (%)
Dec-19 Mar-20
Promoters 30.30 30.30
FIs & Local MFs 38.18 39.63
FPIs 10.91 9.87
Public & Others 20.61 20.20
Pledged Shares 0.0 0.0
Source : BSE
Naveen Trivedi [email protected] +91-22-6171-7324 Aditya Sane [email protected] +91-22-6171-7336
Page | 2
Voltas: Results Review 4QFY20
Voltas Quarterly Commentary Particulars 1QFY20 2QFY20 3QFY20 4QFY20 Industry/ Co Strategy
- Nationwide heatwave and delayed monsoon benifited the industry - Election had an effect on order finalisation - Global uncertainty continued amid Iran crisis and US-China trade war - UCP industry grew 36% YoY
- Global economy showcased slowdown across the board - UCP industry saw 33% growth YTD - Co is focusing on expanding reach in Tier 2 & 3 cities, particularly in South - Mgt indicates a willingness to increase presence on Ecomm
- Trade-war continued to put pressure in China - Coronavirus has disrupted the flow of components from China for all RAC players - Macro headwinds indicate lower spending power and lower consumption in domestic markets - MGT remains cautiously optimistic for overall growth
- Co intends to reduce its dependence on imports from any one particular country in the long term. Thereby, co has already started procuring components from within India. - Voltas is exploring several cost saving initiatives, including moving certain roles to wfh even after Covid.
Revenues & Margins
RAC - Mkt share 24.1% YTD and 25.3% for June at multi brand outlets - RAC: 76% is split, 24% is window - Mgt maintains its guidance of EBIT margin of 11-12% - Launched the flexible, adjustable inverter AC range - Partnered with EESL to offer 50,000 energy efficient and environment friendly AC's
- Mkt share 24.4% YTD at multi brand outlets - RAC: 72% is split, 28% is window. Inverter is 50% of split - Inverter AC's continued to increase in revenue mix - Margin dip in 2Q was on account of volumes - 11% margins going forward are expected to be sustainable
- RAC mkt share 24.3% YTD, co saw 35% growth in 9MFY20 (29% mkt growth YoY) - Inverter AC sales are now 46% of AC sales - There was no broad based price reduction by the co despite competition - If coronavirus crisis extends beyond 4Q, alternatives can be procured from Korea/Thailand - Impact of the custom duty increase in Budget 2020 will be passed on to consumers - Supplies to EESL continuing but the ramp up is slow. - Old players are now re-entering Window AC - Co is working on several new age launches like Alexa powered AC - Air coolers mkt share is 11.2% (No 3 player)
- RAC performance was strong in Jan/Feb. - YTD volume growth was 50% in Feb 2020, with a market share of 24.2% (up 50bps yoy). - Inverters accounted for 64% of split AC sales and 50% of overall AC sales. - RAC market growth YTD Feb 2020 was ~30%. Growth for FY20 is estimated to be 24%. - Air Coolers saw growth of 60% yoy for Voltas as co gained market share. - Approx 60 days of inventory is currently held by the channel. - Co does not intend to take price decrease. - RAC sales through Ecomm for all of India, as well as for Voltas, are 8-10% of total.
EMPS - Revenues and margins saw a dip but carryforward order book was maginally higher - Rural electrification and water connectivity drives by the govt will keep the flow of revenue consistent
- Order book saw 34% growth driven by metros and rural electrification - Water orders comprised of last mile, STP (sewage treatment plants) and water purification. Also looking for desalination - Although competition remains tough, co is confident of gaining business as most of the big projects require large players to execute them and the bids tend to be competitive - EBIT margins of ~7% are sustainable
- Slow execution and delayed collection of receivables dragged the segment, slow recovery expected. Mgt will increase order book gradually until execution picks up - Project sizes in India are small which makes management difficult. Co intends to go after bigger products so they become manageable - 2-2.5 order/revenue cover targeted
- Domestic projects were hit by lockdown and labour constraints. - Covid has not stopped construction activity in MENA. Execution pace has reduced. - Total order book in the international business as on 31st March stood at Rs 30bn. - Co expects to witness delay in project execution and collection. - Reduction in govt revenues is likely to affect new projects undertaken.
Others - Mozambique continued to perform well - Voltbek stabilized well. Co is in the process of setting up a plant at Salem expected to be functional by end of 2019. Factory will be for mfg of direct cool refs and WMs
- Voltbek launched a 5 star washing machine - Direct cool refs will also be launched from Dec. Already selling FF refs, WMs, dishwashers, microwave ovens - EESL and Tata Power programs have been signed recently and will take time before they are ramped up.
- Volt-Beko commenced production at Gujarat. - Overall, Volt-beko has sold 220,000 units in 9MFY20. - Direct cool is 80% of ref market on vol basis and the JV will now begin selling them due to the new factory - Volt-Beko is a budgeted loss. Breakeven is expected by 2024-25 with 10% mkt sh
- Volt-beko has seen investment of Rs 3.35bn. Co has developed a complete refrigerator range, with 35 SKUs. Currently, Volt-beko factory capacity is 1mn units, which can be scaled up to 2.5mn units. - Co gained market share in frost free refrigerators and washing machines.
Page | 3
Voltas: Results Review 4QFY20
Quarterly Financial Snapshot: Consolidated
(Rs mn) Q4FY20 Q4FY19 YoY (%) Q3FY20 QoQ (%)
FY20 FY19 YoY (%)
Net Sales 20,896 20,628 1.3 14,925 40.0 76,581 71,241 7.5
Material Expenses 14,912 15,790 (5.6) 10,655 40.0 55,549 52,622 5.6
Employee Expenses 1,776 1,664 6.7 1,734 2.4 6,717 6,419 4.7
Other Operating Expenses 2,288 1,732 32.1 1,561 46.6 7,448 6,083 22.4
EBITDA 1,920 1,443 33.1 976 96.8 6,867 6,117 12.3
Depreciation 82 59 38.3 80 2.2 320 240 33.3
EBIT 1,838 1,384 32.8 895 105.3 6,547 5,877 11.4
Interest Cost 61 106 (43.1) 57 5.6 211 330 (36.0)
Other Income 605 572 5.7 543 11.4 2,306 1,863 23.8
PBT (before exceptional) 2,382 1,849 28.8 1,381 72.6 8,642 7,410 16.6 Shareof profit / (loss) of jv and associates -195 -193 na -187 na -687 -518 na
PBT 2,188 1,656 32.1 1,193 83.3 7,955 6,892 15.4
Exceptional item (20) - na - na (512) (118) na
PBT (after exceptional) 2,167 1,656 30.9 1,193 81.6 7,443 6,774 9.9
Tax 572 239 139.9 314 82.5 2,233 1,635 36.5
Reported PAT 1,595 1,417 12.5 880 81.4 5,211 5,139 1.4
Adjustment 17 0 na 0 na 339 85 na
APAT 1,612 1,417 13.7 880 83.3 5,549 5,223 6.2
EPS (adjusted) 4.9 4.3 13.7 2.7 83.3 16.8 15.8 6.2 Source: Company, HSIE Research
Quarterly Performance Analysis
As a % of Revenue Q4FY20 Q4FY19 YoY
(bps) Q3FY20
QoQ (bps)
FY20 FY19 YoY (%)
Material Expenses 71.4 76.5 -518 71.4 -3 72.5 73.9 -133
Employee Expenses 8.5 8.1 43 11.6 -312 8.8 9.0 -24
Other operating expenses 10.9 8.4 256 10.5 49 9.7 8.5 119
EBITDA Margin (%) 9.2 7.0 219 6.5 265 9.0 8.6 38
Tax Rate (%) 26.2 14.4 1176 26.3 -12 28.1 23.7 434
Net Profit Margin (%) 7.7 6.9 83 5.9 181 7.2 7.3 -9
Source: Company, HSIE Research
Con. revenue saw a growth of 1% yoy to Rs 20.9bn vs. expectation of 8% yoy dip. EBITDA increased sharply by 33% to Rs 1,920mn (est Rs 1,513mn).
Page | 4
Voltas: Results Review 4QFY20
Segmental Performance
(Rs mn) Q4FY20 Q4FY19 YoY (%)
Q3FY20 QoQ (%)
FY20 FY19 YoY (%)
Segmental Gross Revenues
UCP 11,989 9,976 20.2 6,005 99.6 40,737 31,556 29.1
EMPS 8,046 9,760 (17.6) 8,081 (0.4) 32,461 36,191 (10.3)
EPS 948 785 20.8 826 14.8 3,317 3,117 6.4
Less: Intersegment revenue 198 4 5 207 17
Total 20,784 20,516 1.3 14,907 39.4 76,308 70,846 7.7
EBIT
UCP 1,754 1,037 69.1 607 189.0 5,121 3,254 57.4
EMPS 113 441 (74.4) 374 (69.8) 1,704 2,773 (38.5)
EPS 269 274 (1.7) 231 16.6 993 1,051 (5.5)
Total 2,136 1,752 21.9 1,212 76.2 7,817 7,077 10.5 Add- Unall Inc / (Unall Exp)
112 145 (22.5) 39 191.2 349 271 28.8
Less- Interest Exp 61 106 (43.1) 57 5.6 211 330 (36.0)
PBT 2,188 1,790 22.2 1,193 83.3 7,955 7,018 13.4
Capital Employed
UCP 4,765 5,556 (14.2) 3,069 55.3 0 5,556 -14.2
EMPS 11,010 9,303 18.3 12,132 (9.2) 0 9,303 18.3
EPS 840 654 28.4 850 (1.2) 0 654 28.4
Unallocable 26,553 25,935 2.4 25,934 2.4 0 25,935 2.4
Total 43,167 41,447 4.1 41,985 2.8 0 41,447 4.1
Revenue Mix (%)
UCP 57.7 48.6 40.3 53.4 44.5
EMPS 38.7 47.6 54.2 42.5 51.1
EPS 4.6 3.8 5.5 4.3 4.4
Total 100.0 100.0 100.0 100.0 100.0
EBIT Mix (%)
UCP 82.1 59.2 50.1 65.5 46.0
EMPS 5.3 25.2 30.9 21.8 39.2
EPS 12.6 15.6 19.1 12.7 14.8
Total 100.0 100.0 100.0 100.0 100.0
EBIT Margin (%)
UCP 14.6 10.4 423 10.1 452 12.9 10.3 263
EMPS 1.4 4.5 -311 4.6 -323 5.2 7.7 -241
EPS 28.4 34.9 -651 28.0 45 29.9 33.7 -379 Source: Company, HSIE Research
UCP EBIT margins rose by 273bps yoy to 14.6% (HSIE 12%). EMPS EBIT margin was at 1.4% vs est of 4%
Page | 5
Voltas: Results Review 4QFY20
Long term performance trends
UCP Segment: Revenue UCP Segment: Margin
Source: Company, HSIE Research Source: Company, HSIE Research EMPS Segment: Revenue EMPS Segment: Margin
Source: Company, HSIE Research Source: Company, HSIE Research Room AC Market Share Order Book to Bill
Source: Company, HSIE Research Source: Company, HSIE Research
25 25
30 32 32
10.0 12.0
0
10
20
30
40
FY15
FY16
FY17
FY18
FY19
FY20
4QFY
19
4QFY
20
(Rs bn)41
22
28 27 28
3632
9.8 8.0
0
10
20
30
40
FY15
FY16
FY17
FY18
FY19
FY20
4QFY
19
4QFY
20
(Rs bn)
-7.6%
2.0%3.2%
6.5%7.7%
5.2% 4.5%
1.4%
-8.0%
-4.0%
0.0%
4.0%
8.0%
12.0%
FY15
FY16
FY17
FY18
FY19
FY20
4QFY
19
4QFY
20
(%)
13.9%13.5%
14.6% 14.7%
10.3%
12.6% 11.9%
14.6%
0.0%
4.0%
8.0%
12.0%
16.0%
FY15
FY16
FY17
FY18
FY19
FY20
4QFY
19
4QFY
20
(%)
20.8 21.021.4
22.1
23.924.3 24.2
18.0
20.0
22.0
24.0
26.0
FY15
FY16
FY17
FY18
FY19
3QFY
20
4QFY
20
(%)
1.0x
1.3x
1.5x
1.8x
2.0x
2.3x
2.5x
-10 20 30 40 50 60 70 80 90
3QFY
174Q
FY17
1QFY
182Q
FY18
3QFY
184Q
FY18
1QFY
192Q
FY19
3QFY
194Q
FY19
1QFY
202Q
FY20
3QFY
204Q
FY20
Order book OB/TTM Revenue (RHS)Rs bn
Page | 6
Voltas: Results Review 4QFY20
Key Assumptions Particulars (Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E Revenue
UCP 25,105 25,210 30,469 32,261 31,556 40,737 32,967 38,934 YoY (%) 22% 2% 21% 6% -2% 29% -19% 18% EMPS 22,085 28,288 26,550 28,452 36,191 32,461 28,804 35,476 YoY (%) -18% 23% -6% 7% 27% -10% -11% 23% EPS 3,601 3,706 3,318 3,099 3,117 3,317 3,398 3,716 YoY (%) -20% 3% -10% -7% 1% 6% 2% 9% Net Revenues 50,782 57,198 60,328 63,803 70,846 76,308 64,941 77,875 YoY (%) -2% 15% 5% 6% 11% 8% -15% 20% EBIT Margin (%)
UCP 13.9% 13.4% 14.5% 14.7% 10.3% 12.6% 10.3% 12.4% EMPS 1.0% 1.9% 3.2% 6.5% 7.7% 5.2% 3.3% 6.2% EPS 30.0% 30.4% 28.8% 32.0% 33.7% 29.9% 31.9% 31.8% Total 9.6% 8.8% 10.3% 11.9% 10.0% 10.2% 8.4% 10.5%
Change in Estimates
Particulars (Rs mn) FY20P FY21E FY22E
New Old Chg (%) New Old Chg (%) New Old Chg (%) Net Revenues 76,581 74,709 2.5% 65,282 70,108 -6.9% 78,249 79,982 -2.2% EBITDA 6,867 6,459 6.3% 4,767 5,690 -16.2% 7,233 7,336 -1.4% PAT 5,547 5,575 -0.5% 4,334 4,997 -13.3% 6,384 6,432 -0.8% EPS 16.8 16.9 -0.5% 13.1 15.1 -13.3% 19.3 19.4 -0.8%
Change in Estimates (Segmental)
Revenue FY20P
FY21E
FY22E
New Old Chg (%) New Old Chg (%) New Old Chg (%)
Unitary Cooling Products 40,737 38,477 5.9% 32,967 34,788 -5.2% 38,934 40,554 -4.0% Electro-Mechanical Project 32,461 32,782 -1.0% 28,804 31,667 -9.0% 35,476 35,414 0.2% Engineering Products & Services 3,317 3,179 4.3% 3,398 3,315 2.5% 3,716 3,643 2.0% Total 76,308 74,425 2.5% 64,941 69,755 -6.9% 77,875 79,594 -2.2%
EBIT FY20P FY21E FY20P
New Old Chg (%) New Old Chg (%) New Old Chg (%) Unitary Cooling Products 5,121 4,515 13.4% 3,406 3,742 -9.0% 4,817 4,739 1.7% Electro-Mechanical Project 1,704 1,926 -11.5% 958 1,507 -36.4% 2,188 2,326 -5.9% Engineering Products & Services 993 1,010 -1.7% 1,083 1,052 3.0% 1,182 1,153 2.4% Total 7,817 7,451 4.9% 5,447 6,300 -13.5% 8,187 8,218 -0.4%
EBIT Margin FY20P FY21E FY22E
New Old Chg (%) New Old Chg (%) New Old Chg (%) Unitary Cooling Products 12.6% 11.7% 84 10.3% 10.8% (42) 12.4% 11.7% 69 Electro-Mechanical Project 5.2% 5.9% (63) 3.3% 4.8% (143) 6.2% 6.6% (40) Engineering Products & Services 29.9% 31.8% (185) 31.9% 31.7% 15 31.8% 31.7% 14 Total 10.2% 10.0% 23 8.4% 9.0% (64) 10.5% 10.3% 19
SOTP Valuation Business Method Mar-22E Multiple (x) Valuation VPS
UCP P/E (x) 3,839 35 134,380 406 EMPS P/E (x) 1,651 17 28,059 85 EPS P/E (x) 897 12 10,767 33 Volt-Beko P/S (x)
1 8,912 27
SOTP
551 Source: Company, HSIE Research
Page | 7
Voltas: Results Review 4QFY20
Peer Set Comparison
Company Mcap
(Rs bn) CMP
(Rs/sh) Reco TP
EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)
FY20P FY21E FY22E FY20P FY21E FY22E FY20P FY21E FY22E FY20P FY21E FY22E
Havells 337 539 ADD 515 11.7 10.7 14.2 46.1 50.6 38.0 31.9 32.3 25.1 21.0 18.3 24.0
Voltas 179 540 ADD 551 16.8 13.1 19.3 32.2 41.2 28.0 25.9 36.2 23.7 22.1 15.9 24.0
Crompton 145 231 ADD 221 7.0 6.2 7.4 33.1 37.0 31.3 23.9 26.8 22.5 38.6 31.0 35.8
V-Guard 78 184 REDUCE 157 4.7 4.8 5.6 44.3 38.0 32.7 30.2 28.0 24.4 24.9 23.1 25.4
Symphony 63 902 REDUCE 867 26.0 22.5 28.9 34.7 40.1 31.2 28.5 32.6 25.2 42.2 31.1 40.0 Source: HSIE Research
Page | 8
Voltas: Results Review 4QFY20
Financials Consolidated Income Statement Consolidated P&L (Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Net Revenues 51,831 57,198 60,328 64,044 71,241 76,581 65,282 78,249
Growth (%) (1.6) 13.0 5.5 6.2 11.2 7.5 (14.8) 19.9
Material Expenses 35,975 40,871 42,359 45,675 52,622 55,549 47,572 57,089
Employee Expenses 5,899 6,351 6,184 5,867 6,419 6,717 7,389 8,276
SG&A Expenses 5,857 5,646 6,001 5,875 6,083 7,448 5,554 5,652
Total Expenses 47,731 52,869 54,545 57,417 65,124 69,714 60,515 71,016
EBIDTA 4,100 4,330 5,783 6,626 6,117 6,867 4,767 7,233
EBIDTA Margin (%) 7.9 7.6 9.6 10.3 8.6 9.0 7.3 9.2
EBIDTA Growth % 47.3 5.6 33.6 14.6 (7.7) 12.3 (30.6) 51.7
Depreciation 280 264 245 244 240 320 365 427
EBIT 3,820 4,066 5,539 6,383 5,877 6,547 4,402 6,806
Other Income 1,087 1,367 1,997 1,727 1,863 2,306 2,098 2,400
Interest 233 158 160 119 330 211 169 161
PBT (before associate income) 4,675 5,275 7,375 7,991 7,410 8,642 6,331 9,045
Share of Loss/(Profit) in Associates (17) 62 (193) 38 (518) (687) (535) (510)
PBT (before exceptional item) 4,658 5,337 7,183 8,029 6,892 7,955 5,796 8,536
Exceptional 462 289 11 20 (118) (512) - -
PBT 5,120 5,626 7,194 8,049 6,774 7,443 5,796 8,536
Tax (Incl Deferred) 1,276 1,696 2,004 2,270 1,635 2,233 1,459 2,148
RPAT 3,843 3,931 5,189 5,779 5,139 5,211 4,337 6,387
Adjustment (347) (202) (8) (14) 85 336 - -
APAT 3,497 3,729 5,182 5,765 5,223 5,547 4,334 6,384
APAT Growth (%) 51.9 6.6 39.0 11.3 (9.4) 6.2 (21.9) 47.3
Adjusted EPS (Rs) 10.6 11.3 15.7 17.4 15.8 16.8 13.1 19.3
EPS Growth (%) 51.9 6.6 39.0 11.3 (9.4) 6.2 (21.9) 47.3
Consolidated Balance Sheet Consolidated BS (Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
SOURCES OF FUNDS
Share Capital 331 331 331 331 331 331 331 331
Reserves 24,816 27,780 32,735 38,721 40,769 42,471 46,475 52,032
Total Shareholders Funds 25,147 28,111 33,066 39,052 41,100 42,802 46,806 52,363
Minority Interest 198 267 285 317 348 365 365 365
Long Term Debt 43 - - - - 54 54 54
Short Term Debt 1,242 2,707 1,709 1,423 3,147 2,124 2,024 1,924
Total Debt 1,285 2,707 1,709 1,423 3,147 2,179 2,079 1,979
Net Deferred Taxes (206) (310) (198) (46) (993) (715) (715) (715)
Other Non-current Liabilities & Provns 709 821 916 883 854 1,008 859 1,030
TOTAL SOURCES OF FUNDS 27,133 31,595 35,779 41,629 44,455 45,639 49,394 55,021
APPLICATION OF FUNDS
Gross Block 4,684 5,218 5,165 5,262 5,766 6,329 7,579 8,829
Accumulated Dep 2,669 2,890 2,889 3,013 3,059 3,379 3,744 4,170
Net Block 2,015 2,327 2,276 2,248 2,707 2,951 3,835 4,659
CWIP 44 13 6 41 157 263 263 263
Goodwill 798 723 723 723 723 723 723 723
Investments in joint ventures and associates 858 793 586 1,558 2,102 2,776 3,026 3,276
Other Non-current Assets 1,224 1,283 907 1,271 2,302 2,818 2,402 2,880
Total Non-current Assets 4,939 5,140 4,498 5,842 7,991 9,530 10,249 11,800
Page | 9
Voltas: Results Review 4QFY20
Consolidated BS (Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Investments 14,511 18,665 22,093 25,978 21,756 20,657 21,657 22,657
Cash & equivalents 2,306 1,855 3,314 2,837 3,211 3,084 8,215 9,450
Inventories 7,704 7,247 9,070 8,130 10,907 14,689 9,837 11,791
Debtors 13,164 13,672 14,541 15,703 18,330 18,336 16,633 19,723
Other Current Assets 8,886 11,805 10,975 14,429 8,650 8,965 7,870 9,433
Total Current Assets 29,754 32,725 34,586 38,262 37,887 41,991 34,340 40,947
Creditors 15,285 17,488 19,946 21,764 23,745 26,889 22,743 27,046
Other Current Liabilities & Provns 9,093 9,301 8,766 9,525 2,647 2,735 2,325 2,787
Total Current Liabilities 24,378 26,789 28,711 31,289 26,392 29,624 25,068 29,833
Net Current Assets 5,376 5,936 5,875 6,973 11,496 12,367 9,272 11,114
TOTAL ASSETS 27,133 31,595 35,779 41,629 44,454 45,639 49,394 55,021 Source: Company, HSIE Research Consolidated Cash Flow (Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Reported PBT 5,120 5,626 7,194 8,049 6,774 7,443 5,796 8,536
Non-operating & EO items (2,071) (1,436) (2,200) (2,194) (1,394) (378) (2,098) (2,400)
Interest Expenses 233 158 160 119 330 211 169 161
Depreciation 280 264 245 244 240 320 365 427
Working capital change 424 (785) 692 (473) (6,456) (911) 3,095 (1,842)
Tax Paid (1,039) (1,637) (1,819) (2,492) (2,708) (2,061) (1,459) (2,148)
OPERATING CASH FLOW ( a ) 2,946 2,190 4,272 3,253 (3,214) 4,625 5,868 2,733
Capex 2,055 (160) (229) (331) (804) (832) (1,250) (1,250)
Free Cash Flow (FCF) 5,001 2,030 4,043 2,922 (4,019) 3,792 4,618 1,483
Investments (3,480) (3,724) (1,286) (2,127) 3,785 (1,242) (1,250) (1,250)
Non-operating Income/(exp) 389 735 781 466 946 (31) 2,514 1,923
INVESTING CASH FLOW (b) (1,036) (3,149) (733) (1,992) 3,927 (2,105) 14 (577)
Debt Issuance/(Repaid) (1,420) 1,422 (998) (287) 1,724 (1,057) (100) (100)
Interest (234) (146) (173) (120) (329) (212) (169) (161)
FCFE 3,347 3,307 2,873 2,515 (2,624) 2,523 4,349 1,222
Share Capital Issuance 0 0 - - - - - -
Dividend (706) (793) (944) (1,407) (1,577) (1,627) (331) (827)
Others
(41) (149) 171
FINANCING CASH FLOW (c) (2,360) 483 (2,115) (1,814) (183) (2,937) (748) (917)
NET CASH FLOW (a+b+c) (450) (475) 1,424 (553) 531 (417) 5,133 1,238
Closing Cash & Equivalents 1,249 1,224 3,123 2,579 3,110 2,693 7,826 9,065 Source: Company, HSIE Research
Page | 10
Voltas: Results Review 4QFY20
Key Ratios Key Ratios FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
PROFITABILITY %
GPM 30.6 28.5 29.8 28.7 26.1 27.5 27.1 27.0
EBITDA margin 7.9 7.6 9.6 10.3 8.6 9.0 7.3 9.2
APAT margin 6.7 6.5 8.6 9.0 7.3 7.2 6.6 8.2
RoE 16.1 14.0 16.9 16.0 13.0 13.2 9.7 12.9
Core RoCE (RoIC) 25.5 26.6 37.3 39.5 27.6 22.1 15.9 24.0
RoCE 14.5 12.6 15.9 14.9 13.0 13.4 9.9 13.1
EFFICIENCY
Tax Rate (%) 24.9 30.1 27.9 28.2 24.1 30.0 25.2 25.2
Fixed Asset Turnover (x) 25.2 24.4 26.4 28.0 24.9 23.8 15.9 15.9
Inventory (days) 54.3 46.2 54.9 46.3 55.9 70.0 55.0 55.0
Debtors (days) 92.7 87.2 88.0 89.5 93.9 87.4 93.0 92.0
Other Current Assets (days) 62.6 75.3 66.4 82.2 44.3 42.7 44.0 44.0
Payables (days) 107.6 111.6 120.7 124.0 121.7 128.2 127.2 126.2
Other Current Liab & Provns (days) 64.0 59.4 53.0 54.3 13.6 13.0 13.0 13.0
Cash Conversion Cycle (days) 37.9 37.9 35.5 39.7 58.9 58.9 51.8 51.8
Debt/EBITDA (x) 0.3 0.6 0.3 0.2 0.5 0.3 0.4 0.3
Net D/E (x) (0.0) 0.0 (0.0) (0.0) (0.0) (0.0) (0.1) (0.1)
Interest Coverage (x) 16.4 25.7 34.5 53.5 17.8 31.0 26.1 42.3
PER SHARE DATA (Rs)
EPS 10.6 11.3 15.7 17.4 15.8 16.8 13.1 19.3
CEPS 11.4 12.1 16.4 18.2 16.5 17.7 14.2 20.6
Dividend 2.3 2.6 3.5 4.0 4.0 1.0 2.5 4.5
Book Value 76.0 85.0 100.0 118.1 124.2 129.4 141.5 158.3
VALUATION
P/E (x) 51.1 47.9 34.5 31.0 34.2 32.2 41.2 28.0
P/BV (x) 7.1 6.4 5.4 4.6 4.3 4.2 3.8 3.4
EV/EBITDA (x) 43.3 41.5 30.6 26.7 29.2 25.9 36.2 23.7
EV/Revenues (x) 3.4 3.1 2.9 2.8 2.5 2.3 2.6 2.2
OCF/EV (%) 1.7 1.2 2.4 1.8 (1.8) 2.6 3.4 1.6
FCF/EV (%) 2.8 1.1 2.3 1.6 (2.3) 2.1 2.7 0.9
FCFE/Mkt Cap (%) 1.9 1.9 1.6 1.4 (1.5) 1.4 2.4 0.7
Dividend Yield (%) 0.4 0.5 0.6 0.7 0.7 0.2 0.5 0.8 Source: Company, HSIE Research
Page | 11
Voltas: Results Review 4QFY20
Rating Criteria BUY: >+15% return potential ADD: +5% to +15% return potential REDUCE: -10% to +5% return potential SELL: >10% Downside return potential
Date CMP Reco Target 9-Jul-19 596 BUY 677
8-Aug-19 598 BUY 690 22-Sep-19 668 BUY 717 11-Oct-19 668 BUY 746 8-Nov-19 666 BUY 742 9-Jan-20 684 BUY 740
11-Feb-20 682 BUY 724 2-Mar-20 679 ADD 744 17-Apr-20 522 ADD 551 2-Jun-20 540 ADD 551
From 2nd March 2020, we have moved to new rating system
RECOMMENDATION HISTORY
400
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9
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Voltas TP
Page | 12
Voltas: Results Review 4QFY20
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