Voltas surges 19% despite Q3 net loss
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Voltas, a listed engineering and cooling solutions company, share price surged 19 per cent on Wednesday even as the company reported a net loss of Rs 115 crore.
Here are some pointers that could explain why the street is positive on the company despite losses:
• Voltas reported a net loss of Rs 115 crore for the December 2011 quarter due to an exceptional item. The company said that there was an upward revision in the estimated cost of a project managed by the company to the tune of Rs 276 crore. This was due to design changes and delays in execution. The company has booked that as a loss in December 2011 quarter.
• The street has decided to reward the company for a better operating performance during the December 2011 quarter. The company’s net sales grew 11 per cent while operating profit (which is calculated before exceptional items, taxes and other items) rose 12 per cent during the December 2011 quarter.
• Voltas’ flagship electromechanical projects division turned in a surprisingly positive revenue growth. The company reported a 19 per cent growth in revenue when the street estimated that the business could grow in single digits. The profitability of this business was also 2-3 per cent higher than the street estimates.
• The company reported an order book of Rs 5,090 crore in the electromechanical division. This was significantly higher than September 2011 and December 2010 quarters. This indicates that the revenue growth going forward could be strong. This could boost the company’s profitability further. The division accounts for over 80 per cent of the Voltas’ revenue and two-thirds of the profits.