Voltas’ Numbers Dip In Q3FY13

Voltas, a Tata group company, came out with its results for the third quarter of the current fiscal on 11th February, 2013. The numbers were far from encouraging. On a consolidated basis, its total income from operations has declined by 1% to Rs 1152 crore on a yearly basis. The bottomline was up by 2.5x to Rs 76.81 crore against a loss of Rs 115.41 crore in the same quarter last year. However, this figure may be misleading, as in the last year same period there was an exceptional item of Rs 259 crore that pulled down the company into a loss of Rs 115 crore. If we adjust the result for the exceptional item, the bottomline has declined by approximately 10%.

Segment wise, electro-mechanical projects and services, which contribute 70% of the total revenue, dragged the overall performance. The income from this segment is down by 3% to Rs 797.25 crore for Q3FY13 as against Rs 824 crore in Q3FY12. Even the earnings from this segment have come down drastically by 90% to merely Rs 5.88 crore for Q3FY13. Another segment, engineering products and services, has performed well. The revenue therein has increased by 18% to Rs 106.6 crore on a yearly basis and the earnings from this segment have increased by 60% to Rs 26.37 crore. The last segment, Unitary Cooling Products for comfort and commercial use, has seen a marginal rise in sales and profit by 2% and 4% to Rs 238 crore and Rs 14.9 crore respectively.

At its CMP of Rs 95, Voltas is discounting its FY13E earnings by 14x, which looks cheaper. We had previously recommended this stock in Dalal Street Investment Journal Vol. 28, Issue No. 2 (dated January 13, 2013), and maintain our ‘buy’ rating for the scrip.