Voltas falls for 2nd day; down over 21% in three months

Voltas fell 1.68% to Rs 965.30, extending decline for second day.

The stock has fallen 2.71% in two days, from its recent closing high of Rs 992.15 recorded on 24 June 2022.

In the past three months, the stock has declined 21.04% while the benchmark Sensex has lost 8.20% during the same period.

On the technical front, the stock's daily RSI (relative strength index) stood at 42.576. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

On the daily chart, the stock is trading below its 50-day, 100-day and 200-day simple moving average (SMA) placed at 1049.98, 1144.89 and 1186.94, respectively. These levels will act as crucial support zones in near term.

As per media reports, a foreign brokerage has cut its target price for Voltas to Rs 930 from Rs 1,000 earlier. This implies a further decline of 3.66% from its current market price.

The brokerage has reportedly said that the company's FY22 return on capital employed (RoCE)/return on equity (RoE) had fallen to 11%/9.6%, its lowest in a decade. Free cash flow (FCF) generation was at Rs 15 per share with conversion (FCF/profit) at 1x.

The research firm reported believes that it will be a tall task for the company to reach its previous peak and maintain its margin. It reportedly sees further downside, given the competitive intensity in high input price environment.

Voltas is the global air conditioning and engineering services provider of the Tata Group.

The company's consolidated net profit declined 23.15% to Rs 182.70 crore on 0.22% rise in net sales to Rs 2633.72 crore in Q4 March 2022 over Q4 March 2021.

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