BackLIC increases stake by 2% in air conditioners giant Voltas
As per the regulatory filing, the shareholding has been increased by 2.02% to 2,93,95,224 equity shares in Voltas from the previously held 2,27,04,306 equity shares.
PremiumLife Insurance Corporation of India (LIC) has increased its stake in home appliances and consumer electronics major, Voltas. On Monday, LIC informed exchanges that it has increased its shareholding to 8.884% of the paid-up capital of Voltas. Earlier, LIC held around 6.862% in the company.
As per the regulatory filing, the shareholding has been increased by 2.02% to 2,93,95,224 equity shares in Voltas from the previously held 2,27,04,306 equity shares.
LIC said that there is an increase of 2% in holding in Voltas during the period from August 10 to November 4, 2022. The transaction was carried out as an open market purchase at an average cost of ₹948.31 per share in Voltas.
On November 4, Voltas shares were around ₹844.85 apiece. While on November 7, the shares tumbled by 1.24% to ₹834.40 apiece on BSE. Voltas has a market cap of around ₹27,609 crore.
Meanwhile, LIC shares closed at ₹633.30 apiece up by 0.84% on BSE. LIC which is the largest life insurer in India has market cap is over ₹4 lakh crore.
Voltas is engaged in the business of air conditioning, refrigeration, electro-mechanical projects as an EPC contractor both in domestic and international geographies.
Should you invest in Voltas shares?
In Q2FY23, Voltas recorded a consolidated net loss of ₹7.41 crore to owners compared to a profit of ₹103.61 crore in Q2FY22. Consolidated revenue from operations stood at ₹1,768.36 crore in Q2FY23 versus ₹1,689.08 crore in Q2FY22.
Post Q2, in its report, Centrum analysts for Voltas said, "with rising competitive intensity in AC, the EBIT margin target has reduced to high single digit over the next year. We further trim our UCP margin estimates to 8.2%/9.0% for FY23E/FY24E, leading to a 5%/12% cut in our EBITDA estimates."
Centrum's note further said, "We roll forward the valuation to H1FY25 with a revised SoTP target price of Rs895. We assign P/E of 45x (down from 50x earlier) to UCP, P/E of 15x to Projects business and a P/BV of 6x to Voltas Beko. Retain REDUCE."
On the other hand, ICICI Direct's note last week said, Voltas’ share price has grown by ~1.64x over the past five years (from ₹545 in November 2017 to ₹890 levels in November 2022). The stock brokerage maintained its HOLD rating on Voltas stock. It added, "We value Voltas at ₹1,005 using SOTP i.e. 7x P/E for EMPS, 9x P/E for EPS, and 50x P/E for UCP on FY24E EPS for each."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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