Voltas net vaults 260% backed by healthy order book
Voltas limited has posted a 260% jump in net profit on a turnover growth of 10% for the first quarter ended FY01. The operating margins were better, up from 3.9% in 1QFY00 to 4.7% in 1QFY01. The reduction in interest cost by 30% has boosted the net profit margin to 2.2% (0.1% in 1QFY01). Other adjustments here include the voluntary retirement scheme amortization expenses.
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The company recently bagged the order worth Rs 9 bn from LG Electronics, the Korean multinational, for supplying 1.2 m refrigerators in three years under the 3 year Original Equipment Manufacturer (OEM) agreement. The company has already supplied over 0.2 m refrigerators to LG in the last 2 years. This order is expected to increase the unit production capacity of the company by 77%. With additional orders from Amul for supplying 110ml capacity visi-coolers, the company is sitting on a healthy order book (Voltas also supplies to other multinationals like Pepsi, Nestle, UB Group and Cadbury).
Voltas is also exiting from the other non-core divisions like steel furniture, textile machinery and material handling businesses, with focus primarily on air-conditioning and refrigeration businesses. Last year the company hived off its chemical plant at Patancheru. This order book situation along with the general buoyant consumer spending should act as a catalysts for topline growth in the coming years.
The stock is currently trading at Rs 35 at a P/E multiple of 40.1x on annualised first quarter FY01 earnings.
Voltas has announced the third quarter (3QFY16) results for FY16. The company has reported a 38.6% YoY growth in sales while net profits fell by 49.5% YoY during the quarter. Here is our analysis of the results.
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