Voltas rises 4% post 3-day slide; brokerages cautious on management's guidance

So far this year, shares of Voltas jumped over 60 percent

Voltas shares bounced back with a 4 percent increase to Rs 1,595 on August 19, following three days of declines. This recovery came after investors booked profits on the counter from a strong June quarter. Although the company’s gains in appliance market share was viewed positively by the Street, analysts expressed caution on the management's unchanged guidance and limited margin expansion potential in the near future.

Goldman Sachs and Kotak Institutional Equities issued 'sell' ratings on Voltas, setting target prices at Rs 1,310 and Rs 1,100, respectively. Both brokerages noted limited potential for margin expansion in the coming quarters due to increased competition. They also emphasised that the sustainability of orders will be a critical factor to watch in the near future.

CLSA also pointed out limited re-rating potential for Voltas due to high valuations. They noted that while the company regained some market share, margins remained weak in Q1. With a valuation of 58x FY26 P/E for the RAC segment, CLSA sees limited potential for re-rating.

Meanwhile, UBS differed from the consensus and shared a 'buy' call on Voltas, raising target price to Rs 1,960 apiece, seeing an upside potential of 23 percent from current levels. The target price came on the back of positive management's commentary on demand outlook for Q2 ahead of festive season and its strengthening position in the room AC segment.

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The air condition maker registered over two-fold jump in net profit to Rs 335 crore in Q1FY25, led by strong volume growth for its room AC business. Its revenue from operations was also up 46 percent YoY to Rs 3,359 crore in the quarter ended June, while overall volume was up 67 percent in the AC segment.

So far this year, shares of Voltas jumped over 60 percent, outpacing benchmark Nifty 50's 11 percent rise.

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