Buy Voltas; target of Rs 1000: Motilal Oswal

Buy

Motilal Oswal's research report on Voltas

Voltas (VOLT)'s 2QFY24 performance was below our estimate, primarily due to the ongoing losses in the EMPS segment. This was attributed to a provision made for delayed collections in overseas projects. EBITDA/Adj. PAT missed our estimates by 31%/56%, despite revenue coming in 15% above our estimate. Management believes that there are signs of increased demand in the upcoming festive season. VOLT’s YTD market share in RAC stood at 19.2% with Aug’23 exit-share at 19.5%. VOLT follows a conservative policy, and provisions for international projects may continue for the next few quarters.

Outlook

We cut our EPS estimates by 7%/5% for FY24/FY25, considering lower margin in the EMPS segment. We reiterate our BUY rating on the stock with a TP of INR1,000 (based on 38x Sep’25E EPS).

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Voltas - 22 - 10-2023 - moti