Voltas shares slump 8% after Q1 results miss Street estimates, brokerages remain cautious

Cooling demand fizzles as early monsoon, high inventories hit Voltas’ sales in Q1

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26 Aug, 2025 12:21

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Shares of Voltas fell 8 percent to Rs 1,202 per share on August 11 after its June-quarter (Q1FY26) results missed Street expectations.

So far in 2025, the stock has fallen 33 percent, underperforming the Nifty 50 index’s 2 percent gain.

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CLSA maintained a “hold” rating but cut its target price to Rs 1,170 per share, citing a 20 percent year-on-year drop in revenue and a 400 basis point fall in EBITDA margin.

The Unitary Cooling Products (UCP) segment’s revenue fell 25 percent year-on-year, with margins plunging to a 10-year low of 3.6 percent. Market share dropped to 17.8 percent from 19.5 percent.

CLSA expects recovery from Q3 onwards but sees flat to a 10 percent decline in full-year industry growth, with high inventories continuing to weigh on utilisation and margins.

Nomura retained its “neutral” rating with a target price of Rs 1,317 per share. It said Q1FY26 UCP margins missed sharply and warned that competitive intensity may keep margins under pressure despite recovery hopes.

The brokerage cut its FY26 revenue growth forecast for room air conditioners to 5 percent, while keeping FY27 and FY28 estimates at 20 percent and 15 percent respectively. It also lowered UCP revenue growth forecasts to 6 percent for FY26 and 24 percent for FY27.

In Q1FY26, Voltas’ net profit slumped 58 percent year-on-year to Rs 140.6 crore from Rs 334 crore in the same quarter last year, as unseasonal weather and muted summer demand hit cooling product sales.

Revenue fell 20 percent to Rs 3,938.6 crore, while EBITDA halved to Rs 178.6 crore. Operating margins contracted to 4.5 percent from 8.6 percent a year earlier.

Management attributed the weak performance to a delayed summer and early monsoon, which dented air-conditioner sales. A high base from last year—when prolonged heat waves boosted record demand—further amplified the decline.

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