Voltas Q2 results a mixed bag; should you buy, sell or hold AC makers shares?
Voltas shares succumbed to selling pressure on Friday after the Tata group AC manufacturer reported a mixed set of Q2 earnings.
Voltas shares faced selling pressure on Friday after the air conditioning company reported a mixed set of financial results for the July-September period. The stock of Voltas, a Tata group company, weakened by as much as Rs 19.3, or 2.3 per cent, to Rs 820 apiece on BSE, coming within Rs 85 of a 52-week low logged in January.
At 11 am, the stock was down 0.9 per cent for the day at Rs 832 apiece on the bourse.
After market hours on Thursday, Voltas reported a consolidated net profit of Rs 35.7 crore for the quarter ended September 30, falling short of analysts' expectations by a wide margin. The AC maker had registered a consolidated net loss of Rs 6 crore for the corresponding period a year ago owing to exceptional items worth Rs 106 crore.
It registered revenue growth to the tune of 30 per cent on a year-on-year basis to Rs 2,293 crore, but earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped 30 per cent to RS 70.5 crore, according to a regulatory filing.
According to Zee Business research, the Tata group firm's quarterly net profit was pegged at Rs 154 crore, revenue at Rs 2,108 crore and EBITDA at Rs 122 crore.
The company's margin contracted by 260 basis points bps) to 3.1 per cent for the second quarter of the current financial year. Zee Business analysts had expected the AC maker's margin to be at 5.8 per cent.
The company registered growth of 20 per cent in its quarterly sales volumes in ACs, exceeding the analysts' estimates of 12-15 per cent.
EDITOR'S TAKE | A mixed bag of results
Zee Business Managing Editor Anil Singhvi pointed out that though Voltas staged strong revenue growth, its results were weak on the operational front.
He expects support for Voltas futures to emerge at Rs 811 and Rs 818 levels.
What analysts make of Voltas after the Tata group company's Q2 results
Morgan Stanley maintained an 'underweight' rating on Voltas after the company's earnings announcement while maintaining its price target at Rs 737 apiece.
Nomura continued with its 'neutral' rating with a target of Rs 920, which suggests an upside of 9.6 per cent from the previous close.
Voltas shares: Past performance
Voltas shares finished the September quarter with a gain of 13.6 per cent, sharply outperforming a 2.4 per cent rise in the headline Nifty index.
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