Voltas Case Study Summary
DuPont Analysis - 5 Stage Model
• Over the years Tax Burden remains almost same. So, it does not play a major role in change of Return on Equity (ROE).
• Asset turnover for Voltas is greater than one which is good for the company. But a declining trend shows negative effect i.e. company is not generating enough revenue as the amount invested in the assets.
• Interest burden ratio increases by almost 80% from 2012 to 2013 and after it is almost constant. It shows in spite of decrease in operating income margin of the company ROE continue to increase and hence shows that interest burden has a major impact on ROE.
• Operating income margin is also a plays a major role in increase and decrease of ROE. It can be observed that as operating income margin
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This is due to the fact that Videocon is more diversified than Voltas.
• But as we compare profits Voltas leads the industry.
• Profit after tax of Voltas 3.5 times as that of Bluestar (second highest in terms of profit).
• Operating profit margin is not up to the mark for Voltas and is less than industry average. Voltas should achieve efficiency in its operations to increase the margin.
• Videocon despite being in loss enjoys higher profit margin due to diversified business and efficient operations.
• But as we compare net profit margin Voltas is the leader of the industry. This is due to higher profits generated by the Voltas.
• Hitachi has the highest EPS ratio and has highest capacity pay dividends. Voltas is third in terms of EPS with 11.65 value.
• P/E ratio of Voltas is good and shows stability. Voltas is having good price for its shares in the market. CONCLUSION
• Voltas is one of the leading manufacturing brand of Air Conditioners in India.
• Voltas share 21% market share of total AC market in India
• Voltas has the proper resources an ability to grow and penetrate Indian AC
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