Technically, Voltas (CMP:308) has immediate support of around 305-300 zone and sustain below that, it may fall to 292-285-277 area. Only consecutive closing below 277, Voltas may further fall to 270-255-245 & 236-225-202 in the near term under worst bear case scenario.
On the upside, sustaining above 305, immediate target may be 314-317-325. Only consecutive closing above 325, it may further scale to 336-342-348-360 & 375 area in the near term under bullish market scenario.
In brief, for Voltas, 277-300 & 360-375 might be very good demand and supply zone in the near term.
Bottom Line: Technical Trading Levels (Positional)
| SL</>5 | FROM SLR | |||||||||
| Voltas | CMP | 308 | ||||||||
| T1 | T2 | T3 | T4 | T5 | T6 | T7 | SLR | |||
| Strong > | 300 | 305 | 314 | 317-325* | 336 | 342 | 348 | 360-375 | <296 | |
| Weak < | 296 | 292 | 285 | 277* | 270 | 255 | 245 | 236-225 | >300 | |
Voltas corrected by around 15% so far from its recent peak amid better than expected monsoon hits us in the month of June after scorching heat wave during March-May. Traditionally, monsoon period is a dull season for AC makers and add to this, there was some downgrade of Voltas by Nomura, citing weaker growth in room AC sales and sluggish recovery of EMP (Electro Mechanical Projects) segment. Market is also cautious about Q1 result of Voltas amid slow down in AC sales and being accompanied by heavy discounts & free installations among various other competitors.
But dull monsoon season after a bumper summer for AC sales is nothing new and sales of AC will probably pick up from coming festival season (Sep-Oct onwards till winter).
On the other side, as par HSBC, Voltas has a strong brand recall and concern about market growth, market share & sustainability of margin expansion is over done.India's average AC penetration level is a mere 3% (with metro/urban India at around 24%), is very low compared to Asian counterparts.
Looking ahead, increase in discretionary spending on the back of over all expected economic recovery (H2FY16 ??) & "Smart City/Affordable Housing" theme may benefit the overall AC segment and Voltas, being a strong brand having superb distribution & servicing chain, might be a bright spot in this segment. GST may also help a bit.
Voltas is now active in low cost high margin air cooler business, which may also help it to sustain market leadership in the days ahead, As par HSBC's SOTP model, fair projected valuation of Voltas is around 380 (UCP@295+MEP@36+ESB@48).
As par BG metrics, current median valuation of Voltas may be around 260 and its projected fair valuation might be around 300-325-365 (FY:16-18).
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| VOLTAS | 11.62 | 63.53 | 19.66 | 251.96 | 268.00 | 259.98 | 277.89 | 314.39 |
| VOLTAS | 14.5 | 73.15 | 19.66 | 281.46 | 299.37 | 290.41 | 277.89 | 314.39 |
| VOLTAS | 18.2 | 84.5 | 19.66 | 315.33 | 335.40 | 325.36 | 277.89 | 314.39 |
| VOLTAS | 22.85 | 98.5 | 19.66 | 353.32 | 375.81 | 364.57 | 277.89 | 314.39 |
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