Voltas Q1 profit seen up 9.2%, UCP may see moderate growth

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26 Aug, 2025 12:21

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Voltas's first quarter consolidated net profit is seen rising 9.2 percent year-on-year to Rs 119 crore, according to average of estimates of analysts polled by CNBC-TV18.

Revenue is expected to increase 4.5 percent to Rs 1,837 crore in June quarter compared to Rs 1,757 crore in the year-ago period on moderation in growth of unitary cooling products (UCP), the major contributor to revenue.

Operating profit (earnings before interest, tax, depreciation and amortisation) may increase 13.3 percent year-on-year to Rs 149 crore and margin may expand 60 basis points to 8.1 percent in the quarter gone by.

Increasing share of UCP segment in the sales mix combined with the turnaround of its EMP business may translate into margin expansion. Better realisation in the UCP segment may further drive margins.

Analysts overall expect a muted quarter from Voltas this time.

Unitary cooling products (UCP)

Company's main segment – UCP division – which has been growing at a phenomenal pace is expected to show moderation in growth impacted by unseasonal rains (leading to short summer), strong rainfall in June, sluggish consumer spend and high base effect.

Analysts believe revenue growth in this segment may be 10-15 percent and volume growth of 6-10 percent. Margin in the UCP division is expected to come off sequentially.

Electro-mechanical projects division (EMP)

Analysts said slower pace of project execution continued to be a challenge in this segment. They are mixed on the performance of this division. Range of expectations on revenue is decline of 5 percent to improvement of 5 percent.

Sustenance of break even at the EBIT (earnings before interest and tax) level is important to watch out for as this segment has been EBIT positive consistently for 4 quarters till Q4FY15.

Key factors to watch out for would be volume growth & market share in the AC segment, order environment in the Middle East (Qatar, Saudi Arabia and Dubai as sharp decline in crude prices has raised apprehensions over the pace of order awards and also execution in Middle East), provision for legacy orders, any claim reversals especially w.r.t. Sidra Medical Project, investment climate driving order inflows in India and initial success in its newly launched air-cooler product in North India.

In June, brokerage Nomura downgraded the stock from buy to reduce and cut target price to Rs 265, implying 20 percent downside risk. It also cut FY16-17e earnings per share estimates by 12-16 percent as recent dealer checks suggest room AC sales “cooling off”.