Voltas - Unitary Cooling Products To Drive Growth, Margin In Near Term: Nirmal Bang

Nirmal Bang Report

We hosted the management of Voltas Ltd. for our conference. They highlighted that Voltas will not sacrifice volume share at the cost of profitability, but will maintain a healthy balance between market share and profitability.

Voltas plans to increase market share by 100 basis points in Q4 FY24 and end FY24 with an exit market share of ~20%.

Even though H1 FY24 was depressed in terms of room AC sales, Q3 FY24 saw good demand and caught up a lot in terms of lost sales – 9M FY24 saw double-digit growth. Overall, RAC industry is expected to grow in double digit in FY24.

Price calibration is being done frequently by RAC players due to the dynamic nature of RAC industry and stiff competition.

We maintain 'Accumulate' with a SOTP-based target price of Rs 1,095, valuing it on FY26E earnings per share.

While we remain positive about unitary cooling product business over the medium term, continued losses in EMPS pose a risk in the near term and could continue to suppress overall margins.

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