Buy Voltas; target of Rs 1500: Emkay Global Financial

Emkay Global Financial' research report on Voltas

We attended Voltas’s analyst meet, to gain deeper insight into its growth roadmap/demand environment. KTAs: 1) The management indicated prebuying activity ahead of the BEE rating changes wef 1-Jan-26 and inventories gradually depleting from 60 days (in Q2FY26) to 45 days (currently) vs 20-25 days (in Q3FY25). 2) The management flagged currency depreciation, elevated commodity costs, and the upcoming BEE norm transition as key variables that will influence pricing actions from Q4FY26. 3) Focus will remain on market share rather than margin. 4) UCP margin will remain sensitive to competitive intensity. 5) Beko continues to gain market share (a close #2 player in SAWM) and will expand distribution by leveraging its RAC distribution network. We expect growth/margin to rebound in FY27E (refer to our report ‘Untimely rain: Killjoy for AC demand, apt time to BUY AC stocks’).

Outlook

We maintain BUY on Voltas, with unchanged TP of Rs1,500, as valuations remain supportive (implied UCP P/S at ~3.6x, below the LTA) and expect earnings traction to improve as seasonality normalizes from H2.