Update on the Indian Equity Market:
On Monday, NIFTY closed in the red at 11,387 (-2.2%). The top gainers in NIFTY50 were ONGC (+1.6%) and TCS (+0.6%). The top losers were Sun Pharma (-7.3%), SBI (-5.9%), and Cipla (-5.5%). The top sectoral losers were MEDIA (-5.8%), PSU BANKS (-4.7%), and PHARMA (-4.6%) and there were no sectoral gainers.
Excerpts of an interview with Mr Pradeep Bakshi, MD and CEO of the Tata Group AC Company, with CNBC TV18 dated 28th August 2020:
● Generally summer months starting from March till June accounts for more than 50% of the sales in the compressor products like the air-conditioner products. Unfortunately, due to the lockdown, right from March 20 onwards until May 20, they lost out nearly 60 days of sales.
● Out of three and a half months, they lost out two months that is somewhere around 50-60% of the business was lost for the industry during these summers because of the lockdown.
● Voltas has done better than the industry while highlighting that most brands haven’t registered growth.
● During this period, the industry has been able to sell the products but most of the brands have not registered growth. However, Voltas’ business, they have done decent numbers during this period.
● In terms of volume, revenue and profitability they are way ahead of the competition and the industry.
● The industry as a whole has not been able to do a great job during Q1. Until July, August also, they have been doing sales, some numbers are clicking but there is a large pile-up of inventory in the industry.
Consensus Estimate: (Source: market screener and investing.com websites)
● The closing price of Voltas was ₹ 635/- as of 31-August-2020. It traded at 48x/ 30x/ 27x the consensus earnings estimate of ₹ 13.2/ 20.9/ 23.9 for FY21E/22E/FY23E respectively.
● The consensus price target is ₹ 659/- which trades at 28x the earnings estimate for FY23E of ₹ 23.9/-
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