Last month we had coverage on VOLTAS Ltd by Citigroup and Edelweiss. Now Indiainfoline has upgraded the stock on the back of strong order backlog.
Voltas’ order book of Rs27bn for its electro-mechanical division ensures healthy revenue growth for next two years. Expect the electro-mechanical division revenues to witness 41.5% CAGR over FY07-09E driven by higher infrastructure spending in Middle East and boom in retail, IT and entertainment sector in domestic market.
Traditionally, unitary segment has been a laggard. However, it has witnessed a sharp increase in EBIT margins since last three quarters, which we feel is structural and sustainable. Voltas is expected to report an EPS of Rs 6.3 and Rs 9.2 for FY08 & 09 respectively. Indiainfoline has set a target price of Rs 265 on the stock.