Brokerage Research Report on Voltas

Excerpt from Research Report published by one of the leading Brokers

At the current market price of 304, based on our estimates, Voltas is trading at FY 2017E and FY2018E P/E of 22.1x and 18.1x, respectively.
With  inflation  under  control,  rate  cuts  announced,  when  coupled  with  Voltas'strong  positioning  in  the  lowly penetrated  AC  market,  comforts  us  that  AC  sales should  continue  to  report  strong  growth,  going  forward.  In  FY2015,  the  UCP segment contributed ~72% of the consol. EBIT.  Also,  completion  of  low  margin  EMP  projects  and  increased  contribution  of  high margin projects indicate that the EBIT margins of the EMP segment would improve from 1.0% in FY2015 to 5.0% in FY2018E. 
On the whole, we expect Voltas to report a top-line and bottom-line CAGR growth of  9.5%  and  13.1%  during  FY2015-18E,  respectively.  Our  growth assumption captures  (a)  pick-up  in  international  award  activity,  which  should  lead  top-line growth  as  well  as  EMP  segment  EBIT  margin  expansion,  (b)  continued  growth  in domestic AC sales, with Voltas being able to retain its ‘Numero Uno’ status.
Noticeably in the  last  few  years, the  EBIT  mix  of  Voltas  has  shifted  from  being
heavily  dependent  on  the  EMP  segment  to a
now  dominant  share  of  the  UCP segment.  The contribution  of  the  UCP  segment  in  the  consol.  EBIT  has  increased
from 32% in FY2011 to 72% in FY2015. We expect the same to be over 64% levels during  FY2016-18E.  Considering  the  shift  in  the  consol.  EBIT  mix,  positive  cues, and  case  for  improvement  in  the  business  segment’s performances,  we  expect
scope for improved profitability and better investment return ratios, going forward.
Considering  the  higher  dependency  on  the  UCP  segment,  we  have  compared Voltas to Hitachi (which is trading at a FY2018 P/E multiple of ~36.0x).
We assign Voltas a 21.0x PE multiple to our FY2018E EPS estimate of 16.8/share and arrive
at a price target of 353 in 12 months time. This reflects 16% upside potential from the current levels.

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SWELECTES looks a good bet for short term traders , Interesting breakout chart with next level of projections. Looks good for 680-700 .

Some more information about the company as per public sources:

"Swelect Energy Systems, formerly known as (Numeric power Systems Limited), has module manufacturing facility at Bangalore (HHV Solar Technologies Limited), and fully backward integrated facility near Salem that manufactures Solar Power Converter, Array Junction Boxes and Solar Module Mounting Structures. SESL also has a 100% owned subsidiary in Singapore for supporting the group’s international business. In a very short time SWELECT has gained its strength in the solar energy space with the status as a complete product company and a leading PV project implementer. As an experienced Energy Systems Company, SESL successfully launched the Smart Grid projects and has over 20 sites of 40 -100 KW installations to its credit in a short time. Across India, the Company has over 1,500 rooftop installations and has commissioned successfully 2 sites of 1 MW SPV parks each under REC scheme and IREDA scheme. The 12 MW SPV Modular Park at Monjanur Village, Karur District, Tamilnadu, is part of its proposed 15 MW capacity that is aimed at selling part of the capacity to prospective Corporate entities from India and overseas. SWELECT has been ranked as No. 1 Rooftop Solar Company (source Soft Disk Awards 2011, 12, 13) for three consecutive years."




"The government push for raising solar power generation capacity to 100,000 MW by 2022 is a golden opportunity for solar equipment manufacturers. The Narendra Modi government has reportedly raised the solar generation target five-fold from the earlier target of 20,000 MW in 2022 envisaged in the Solar Mission. Fuel shortage, volatility in prices, supply issues and policy paralysis plagued the thermal power generation sector the past couple of years. This brought into focus renewable energy sectors such as wind and solar which do not pose the fuel problems. India, which has about 300 days of sunshine annually, has the potential to host a solar power project almost anywhere. Solar PV installations in India crossed 2.6 GW at the end of FY14 with about 1.1GW of manufacturing capacity commissioned during the current financial year. The government’s solar power push is now expected to bring more manufacturers to the market. The past year has seen a spate of new solar power projects such as the R808-crore 100 MW solar project in Rajasthan, partly funded by the International Finance Corp. Madhya Pradesh is setting up a 750 MW plant touted to be the world’s biggest solar power unit with World Bank partly funding the asset. The ministry of new and renewable energy is rolling out a scheme for setting up 25 solar parks, including ones with ultra mega solar power projects of 500 MW or more. The ministry expects to commission the projects by FY19 and the plan will have an estimated central financial assistance of R4,050 crore. The scheme has got Presidential sanction last month, according to a senior ministry official. Till December 15, 2014, the country has a total commissioned solar manufacturing capacity of 3,002.66 MW, with Gujarat leading the state tally with operating capacity of 929 MW, followed closely by Rajasthan with 839.5" "MW. At CMP, the stock trades at a P/E of 33x FY14 EPS. In Q2FY15, the Company witnessed an outstanding performance. On YoY basis, topline witnessed a whopping growth rate of 216 percent driven by robust growth in solar systems segment whereas on yoy basis it witnessed a growth of 16 percent to touch Rs. 181 mn. The Company reported PAT from loss making both on yoy and qoq basis to touch Rs. 15.89 mn."

Read more: http://traderscockpit.proboards.com/thread/353/buy-swelectes#ixzz3SwWnNQRK