Buy Voltas, tgt Rs 177: Kotak PCR 2008-07-08

Source : moneycontrol.com
Kotak PCR has maintianed buy rating on Voltas with target price of Rs 177 in its July 08, 2008 report. "Voltas has formulated plan to reach turnover of Rs 100 billion by 2011. Out of which, Rs 70 billion would be contributed organically. This implies a revenue CAGR of 40% over the next four years. The company has plans to acquire businesses in niche areas that would catalyse the growth rate. At the bottomline level, the target is to achieve a net profit margin of 10% as compared to 3.5% in FY07. With significant buoyancy in the Middle East as well as Indian markets, the company's emphasis has been on project selection. Towards this, the company has expanded its scope of work and is also looking at new geographies. Company sees further scope for margin improvement and is making efforts to improve margins in projects and unitary cooling business. We have revised our target price from Rs 187 to Rs 177 based on DCF. In our revised workings, we have incorporated higher cost of capital thereby depressing the target price. In view of the attractive upside at current levels, we upgrade the stock to a BUY" according to Kotak PCR report.