SHARE PRICE OF VOLTAS: TARGET ACHIEVED!!!

Welcome back to one more interesting series of articles wherein we’ll discuss the share price of Voltas which was analyzed earlier and has achieved the target predicted by us in a span of 78 days.

Let’s check the parameters which helped the share price of Voltas to achieve the desired target of approximately 25%.

BUSINESS ANALYSIS FOR TARGET ACHIEVEMENT

Voltas made a statement that the business related to Unitary Cooling products made a steady recovery and achieved a massive growth of 24% and around 60% of the company’s revenue comes from this segment during the quarter of September 2021.

Room air conditioners (AC) contributed a growth of 19%.

Commercial refrigeration products contributed a whopping 31% for Voltas’s growth and 78% by air coolers.

Voltas has maintained its no. 1 position in the room air conditioner business with its market share of 25.9% YTD August 2021.

Revenue related to Engineering Products and Services also rose by 34% which ultimately helped the company to attain the expected financial results.

FINANCIAL ANALYSIS FOR TARGET ACHIEVEMENT   

Figures in Rs. Crores

Quarterly Results	Jun 2019	Sep 2019	Dec 2019	Mar 2020	Jun 2020	Sep 2020	Dec 2020	Mar 2021	Jun 2021	Sep 2021
Sales	2654	1422	1493	2090	1297	1613	1995	2652	1785	1689
Expenses	2384	1325	1414	1917	1242	1522	1869	2343	1680	1579
Operating Profit	270	97	79	173	55	91	126	309	105	110
OPM %	0.1	0.07	0.05	0.08	0.04	0.06	0.06	0.12	0.06	0.07
Other Income	0	66	54	58	67	38	52	32	75	48
Interest	4	5	6	6	7	6	3	10	4	6
Depreciation	8	8	8	8	8	8	8	9	9	10
Profit before tax	258	150	119	217	108	115	166	321	168	143
Tax %	0.36	0.29	0.26	0.26	0.24	0.31	0.22	0.26	0.27	0.27
Net Profit	165	106	87	159	81	78	128	238	122	104
EPS in Rs	4.99	3.22	2.63	4.8	2.45	2.37	3.87	7.18	3.68	3.13

The main reason for the increase in share price of Voltas was the reduction in expenses in the quarter ended 30-09-2021 which ultimately helped in achieving an operating profit of ₹ 110 Cr.

In the below table we have included the balance sheet of Voltas Ltd which clearly states that the Reserves are increasing steadily. Increase in Reserves is an indication that investors are very much interested in this stock.

Liabilities have reduced in the quarter ended 30-09-2021 which shows that management is on a role to maintain this company as the market leader for years to come.

Figures in Rs. Crores

Balance Sheet	Mar 2013	Mar 2014	Mar 2015	Mar 2016	Mar 2017	Mar 2018	Mar 2019	Mar 2020	Mar 2021	Sep 2021
Share Capital	33	33	33	33	33	33	33	33	33	33
Reserves	1593	1786	2069	2778	3274	3872	4077	4247	4960	5094
Borrowings	262	264	122	271	171	142	315	219	261	427
Other Liabilities	2676	2660	2662	2788	2991	3249	3091	3657	3402	2667
Total Liabilities	4564	4744	4886	5869	6469	7296	7515	8156	8655	8220
Fixed Assets	300	288	269	276	300	297	343	380	388	383
CWIP	0	2	4	1	1	4	16	26	9	15
Investments	407	732	1094	1975	2268	2754	2386	2343	3046	3011
Other Assets	3857	3721	3519	3617	3901	4242	4771	5406	5212	4811
Total Assets	4564	4744	4886	5869	6469	7296	7515	8156	8655	8220

SHARE HOLDING SYNOPSIS

Share holding pattern	Jun 2019	Sep 2019	Dec 2019	Mar 2020	Jun 2020	Sep 2020	Dec 2020	Mar 2021	Jun 2021	Sep 2021
Promoters	30.3	30.3	30.3	30.3	30.3	30.3	30.3	30.3	30.3	30.3
FIIs	12.99	10.19	10.91	9.87	10.71	12.44	14.55	14.38	17.24	22.31
DIIs	35.89	39.05	38.18	39.63	38.88	38.94	37.36	37.22	33.87	31.61
Government	0.41	0.41	0.41	0.41	0.46	0.29	0.24	0.24	0.24	0.24
Public	20.41	20.06	20.2	19.79	19.65	18.03	17.54	17.86	18.34	15.53

Promoters have maintained their position in this stock.

But there is a great interest shown by FIIs which is showcased by their action of increasing the stake in this stock by  around 5%.

Now, let’s deep dive into the technicalities of the share price of Voltas.

CHART PATTERN ANALYSIS

During the prior analysis we had highlighted the formation of a reverse head and shoulder pattern.

The stock did give a breakout and achieved its target of ₹ 1241.

The stock rallied till ₹ 1356 and showed an upside of approximately 25%.

Reverse head and shoulder pattern is a tested bullish pattern which has again shown its merit by helping us to reach the said target.

MOVING AVERAGE

For the share price of Voltas, we had taken 9 days and 21 days moving averages.

As per the historical crossovers we had predicted that there would be a rally in the stock once the two moving averages again cross each other.

The same happened and the stock achieved its desired target.

The 9 days moving average is indicated in red while the 21 days moving average is blue.

SUPER TREND

Super trend indicator showed a buying signal which made the conviction stronger on this stock.

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