While the consumer segment (56 per cent of revenues) boosted the firm’s performance, the project segment (38 per cent of its top line) posted a 17.8 per cent decline in sales due to slower execution of projects. Yet, Voltas’ revenues, at Rs 2,150 crore, up 1.4 per cent YoY, were better than the consensus estimate of Rs 1,999 crore, and net profit at Rs 160 crore — even better against the estimate of Rs 120.7 crore.
What’s more, order inflows were impressive, and FY20 ended with an order book of Rs 7,800 crore as compared to FY19’s Rs 5,000 crore. This provides comfort on future growth, as new orders are predominantly from India. The Metro rail and other government projects are expected to see decent execution, even as international projects may see some slowdown, say analysts.
The easing of lockdown
is also lifting investor sentiments as sales pick up. "The past two weeks have seen strong demand led by the heat wave in North India, which has provided some respite," says Tarang Bhanushali of YES Securities. The initial part of the seasonally-strong quarter has been a washout, and some relief now is providing comfort.
While some reduction in the high channel inventory is positive, with a significant part of the peak summer season sales being impacted, analysts are cutting their forward earnings estimate. Credit Suisse has cut the earnings estimate for FY21 and FY22 by 9 per cent and 7 per cent, respectively, to account for the impact of a longer lockdown, and revised their target price to Rs 650, from Rs 725 earlier. On the whole, the Street is positive on the stock.