Shares of Voltas, a Tata Group Stock tanked 5.50% on Thursday to reach an intraday low of ₹ 807.60 apiece. This happened after the company reported its results for the fourth quarter of FY23 and terminated a joint venture pact with Highly International (Hong Kong) Limited. A 03:18 PM, the company’s shares were quoting at ₹ 809.10 apiece, down 5.32%.
Voltas is a leading player in the compressor-based cooling market. It is engaged in the business of air conditioning, refrigeration, and electro-mechanical projects as an EPC contractor both in domestic and international geographies.
The company recently reported its earnings for the quarter that ended on March 31, 2023. Its total income came in at ₹ 3,003 crores, up 11.06% as compared to ₹ 2,704 crores reported in the corresponding quarter last year. It posted a profit of ₹ 143.00 crores in the latest quarter, indicating a decline of 21.86% as compared to ₹ 183.00 crores reported in the corresponding quarter last year.
On an annual basis, Voltas reported a total income of ₹ 9667 crores in FY 2022-23, indicating an increase of 18.99% as compared to ₹ 8124 crores reported in FY 2021-22. Its profit declined by 73.12% from ₹ 506 crores in FY 2021-22 to ₹ 136 crore in FY 2022-23.
In another development, Voltas said that it has terminated an agreement to set up a joint venture with Highly International (Hong Kong) Ltd to manufacture compressors in India after it did not obtain the necessary approvals from the government.
The Tata Group company was trying to reduce dependency on the import of important components such as compressors by setting up a joint venture. The agreement also included sourcing raw materials and components required for manufacturing these products.
Voltas is a mid-cap company with a market capitalization of ₹ 28,277 crores. It has a low return on equity of 9.61% and an ideal debt-to-equity ratio of 0.07. It has a P/E ratio of 162.57, which is significantly higher than the industry P/E of 11.01, indicating that the stock is overvalued as compared to its peers.
Written by Simran Bafna
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