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Why Voltas Limited’s stock is struggling?
Voltas Limited is one of the leading air-conditioned providers. The stock has been facing a downturn due to several factors. The main reason for this significant fall is increased competition. New players have entered the sector and this crowd has led to a price war. This forced Voltas Limited to reduce prices to stay in a competitive market. Consequently, lower prices and increased cost has squeezed the margins.
The decline in margins, profit, FII stake, free cashflows, and increase in expenses and debt has also contributed to its downtrend. Additionally, USB has recently downgraded the stock, impacting shareholders’ confidence in future growth prospects.
Basant Maheshwari, a renowned figure in the stock market mentioned in one of his interviews that he has lost a 60% of the money in Voltas Limited as it was a cyclical industry.
Let’s understand fundamentally and technically the challenges Voltas faced and the reasons for the fall in stock.
FINANCIALS OF VOLTAS LIMITED
Declining Profit after tax (PAT)
PAT is a crucial aspect responsible for financial wealth. In Voltas’s case, PAT has been declining significantly. From Rs 529 crore in March 2021 it has dropped to Rs 136 crore in March 2023. the factors affecting profit after tax are increased operational cost, and input cost inflation that hampered the ability of Voltas to generate profits. The downtrend in PAT has affected the investor’s confidence in the stock.
In Rs crore
| Particulars | MAR’21 | MAR’22 | MAR’23 |
| Sales | 7,556 | 7,934 | 9,499 |
| Expenses | 6,975 | 7,934 | 9,045 |
| Profit after tax | 529 | 506 | 136 |
Rise in expenses and Fall in margins
The raw material prices are significantly rising which has created a challenging environment for Voltas. The increase in labor costs and other logistic expenses have pressurized the margins. The rise in expenses has hit the margins and profitability of the company. The inability to pass on these costs to customers due to competitive prices has impacted the company.
| Particulars | MAR’21 | MAR’22 | MAR’23 |
| Operating profit margin | 8% | 7% | 5% |
Decrease in free cashflows
The free cash flows of the company are utilized for the expansion of business or dividends distribution. The free cash flows from operations are declining significantly which decreases the scope of expansion and growth. This affects shareholders’ confidence.
In Rs crore
| Cash flow | MAR’21 | MAR’22 | MAR’23 |
| Operating activities | 556 | 584 | 159 |
Increased Liabilities
An increase in debt burden is another factor compounding the struggle. This decreases the free cash flows restricting the company to expand its business and rewarding shareholders.
In Rs crore
| Mar’21 | Mar’22 | Mar’23 | |
| Debt | 261 | 361 | 651 |
Decrease in FII stake
| Shareholding pattern | MAR’22 | MAR’23 |
| FII | 26.19% | 20.58% |
The decrease in Foreign institutional investors (FII) indicates the waning interest of foreign investors in the company. This suggests a lack of confidence in the company’s growth prospects and impacts share prices negatively.
TECHNICAL ANALYSIS OF VOLTAS LIMITED STOCK
The 200-day simple moving average for the last year stands at Rs 985.82. This indicates a downtrend.
In conclusion, Voltas stock is operating in a challenging environment.
New Delhi, February 19, 2024 – The Indian Renewable Energy Development Agency Ltd. (IREDA) and Punjab National Bank (PNB) have formed a strategic alliance, signing a Memorandum of Understanding (MoU) to boost renewable energy initiatives across India. This collaboration aims to co-finance and syndicate loans for diverse renewable energy projects, marking a significant step towards achieving sustainable energy goals. Despite this the stock trades negative in the early session.
Strengthening Renewable Energy Financing
In a significant move at IREDA’s New Delhi office, Dr. R. C. Sharma, IREDA’s General Manager, and Shri Rajeeva, PNB’s Chief General Manager, inked the MoU. This event, witnessed by Shri Pradip Kumar Das, IREDA’s CMD, and Shri Atul Kumar Goel, PNB’s MD & CEO, along with senior officials from both entities, sets the stage for a transformative partnership in renewable energy financing.
A United Front for Green Energy
“This strategic partnership between IREDA and PNB represents a major leap in our mission to accelerate renewable energy growth in India,” stated Shri Pradip Kumar Das, CMD of IREDA. By leveraging their combined strengths, IREDA and PNB are committed to offering substantial financial backing to renewable energy projects, thus supporting sustainability and environmental conservation. This initiative aligns perfectly with the Hon’ble Prime Minister’s COP26 announcement to achieve a 500 GW Non-Fossil-based electricity generation capacity by 2030.
Broadening Support for Renewable Projects
The MoU includes provisions for joint lending, loan syndication, and underwriting, as well as managing Trust and Retention Account (TRA) for IREDA borrowers. It also facilitates investments in bonds issued by either organization, ensuring competitive terms of sanction and pricing for IREDA borrowings.
Building a Coalition for Clean Energy
IREDA’s collaboration with PNB enhances its portfolio of partnerships with premier financial institutions aimed at co-lending and loan syndication for renewable energy projects across India. Moreover, these strategic alliances underscore the collective drive towards meeting India’s renewable energy aspirations.
Recent development for IREDA
Bhubaneswar, February 11 – IREDA takes a groundbreaking step by partnering with the Indian Institute of Technology, Bhubaneswar, to foster innovation and research in the renewable energy sector. Signed at the 100 Cube Start-up Conclave at IIT Bhubaneswar, this MoU aims to support collaborative innovation, technology transfer, and the nurturing of the start-up ecosystem in renewable energy.
Pioneering Renewable Energy Research
Shri Pradip Kumar Das, CMD of IREDA, and Dr. Debi Prasad Dogra, Independent Director of IIT Bhubaneswar, sealed the partnership in the presence of Shri Dharmendra Pradhan, the Hon’ble Union Minister, and Prof. Shreepad Karmalkar, Director of IIT Bhubaneswar. “Our partnership with IIT Bhubaneswar marks a pivotal milestone in promoting sustainable development and innovation within the renewable energy sector,” said Shri Pradip Kumar Das.
Advancing Clean Energy Development
The collaboration promises to jumpstart joint research initiatives, facilitate technology transfers, and offer comprehensive support to start-ups in clean energy. It also includes capacity-building efforts such as training programs and workshops to bolster IREDA officials’ expertise in renewable energy.
Why IREDA share is going up?
Litsed just a month ago, shares of IREDA have more than doubled in the PSU rally. This increase in stock price is primarily because of the PSU stock growth we witnessed in the early half of Febuary. Moreover, we feel the stock was undervalued at a listing price. Despite the recent up stock currently trades at a PE of 35, this is fairly valued as per the valuations of the competitors. Investors must explore into balance sheet of companies before making a buy or sell decision.
Embracing a Sustainable Future
These partnerships signal IREDA’s commitment to advancing India’s renewable energy capabilities. Through strategic collaborations and fostering innovation, IREDA aims to pave the way for a sustainable and energy-secure future, aligning with national and global clean energy targets. Read more on renewable energy and Tata Power below.
Also follow us on Tradealone for more such timely updates on your favourite stocks.
Key Developments at Manorama Industries
Raipur, January 15th, 2024 – Manorama Industries Limited, a front-runner in specialty fats, butters, and exotic products, is hitting the headlines with two major announcements that could reshape its market presence and shareholder value.
1:5 Stock Split: Making Shares More Accessible
The Board of Directors has given the green light to a stock split, changing the face value of its shares from INR 10 to INR 2. What does this mean for investors? Simply put, it’s going to make the company’s shares more affordable and increase their liquidity in the market. A smart move that could attract more investors!
Geographic Expansion and Product Diversification
The company isn’t just stopping at a stock split. They’re setting their sights on bigger, global goals. Manorama plans to strengthen its roots in key international markets by setting up entities in the UAE, Russia, and other strategic locations. This expansion aims to bolster their business operations significantly.
Chocolate & Confectionery: The New Frontier
But there’s more brewing at Manorama. They’re eyeing the lucrative Chocolate & Confectionery sector. Think real chocolate, super compound slabs, compound chocolate, and specialty cocoa products. It’s a natural extension of their existing business line, tapping into both domestic and international markets.
Updates and Developments:
- New Fractionation Plant: The company is gearing up to complete its new fractionation plant’s CAPEX by FY24. This expansion is set to boost its production capacity, solidifying its position in the global market for CBE and specialty butter & fats.
- Credit Rating Upgrade: Manorama’s commitment to growth and excellence has been recognized with an upgraded credit rating by CARE, now standing at ‘CARE A-, Stable’.
- Investor Relations: Ernst & Young LLP has been roped in to manage their investor relations, signaling a step towards strengthening stakeholder communication.
- Manorama Industries share has jumped around 100% in the last 1 year, doubling from 1000 to 2000 rupees per share. It’d be interesting to see how the stock price reacts to this news.
Words from the President
Mr. Ashish Saraf, President of Manorama Industries, expresses confidence in these strategic moves. The stock split, geographic expansion, and foray into new product lines are not just about growth but also about enhancing shareholder value and meeting global demands.
About Manorama Industries Limited (MIL)
Since 2005, MIL has been a leader in the manufacturing of specialty fats & butters. With a focus on R&D and quality, MIL offers customized solutions to top global companies. Their commitment to ESG practices underscores their dedication to sustainable and responsible growth.
EaseMy Trip popularly known for for its travel services, just stepped into the insurance world with the launch of its new arm, EaseMyTrip Insurance Broker Private Limited. This move aims to expand their services and cater to the insurance market’s growing needs. By venturing into insurance, the company plans to leverage its customer base of 20 million users.
EaseMy Trip is looking at Opportunities in the Insurance Market
India’s insurance sector is on the rise, with annual growth rates of 32-34%. By 2027, experts believe that the sector can reach a milestone of US$200 billion. EaseMy Trip sees this as an opportunity to expand its offerings and expand its business horizons.
Pioneering Change in the Industry
The incorporation of EaseMyTrip Insurance Broker Private Limited as a distinct entity under the parent brand signifies the company’s dedication to innovation. Mr. Nishant Pitti, a driving force behind the company, takes the helm as the Director, ushering in a new era for the company.
CEO’s Enthusiasm and Vision
Mr. Nishant Pitti, CEO and Co-Founder of EaseMyTrip, is excited about this leap into the insurance domain. He aims to elevate their customer offerings by providing a comprehensive travel ecosystem that now includes insurance solutions.
A Vision for Innovation
EaseMyTrip Insurance Broker Private Limited is set to redefine the insurance sector. Fueled by innovation and a customer-centric approach, the company aims to meet customers’ evolving needs effectively.
A Glimpse into EaseMyTrip
EaseMyTrip, a prominent online travel platform listed on NSE and BSE, has been flourishing at a remarkable rate. Offering end-to-end travel solutions with no booking fees, it provides access to a vast network of airlines, hotels, and transportation services. Read more Finance news with Tradealone.
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