Hold Voltas; target of Rs 1,260: ICICI Securities

ICICI Securitie's research report on Voltas

Voltas’ revenue grew 42.1% while EBITDA/PAT declined 12.6%/19.3% YoY. EBITDA margin declined to 4.5% (-284bps YoY) due to higher commodity costs and other expenses. Higher brand-building and distribution spends have likely led to an increase in other expenditure as a percentage of net sales, in our view. Higher effective tax rate and interest cost impacted earnings.

Outlook

While the strong growth in the air conditioner segment is encouraging, profitability of international projects remains a key concern. We raise our FY25E/FY26E earnings by 2.5%/4.3% to factor in strong growth in UCP segment and normalisation in EMP business. Maintain HOLD with a DCF-based revised target price of INR 1,260 (implied P/E: 51x FY26E).