Buy Voltas; target of Rs 1593: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Voltas Ltd (VOLT) reported healthy volume growth in the UCP segment and expects continued strong demand driven by the upcoming summer season. UCP EBIT margins contracted due to the liquidation of commercial refrigerator inventory, upfront cost related to the Chennai plant, and increased spending on ISD, BTL and ADL advertising. UCP segment margins are expected to be at high-single digits in Q4FY25 and FY25. VOLT has maintained its market share in RAC (exit market share of 20.5% by Dec’24 vs 21.0% by Sep’24). EMPS business is expected to see healthy revenue growth with a positive outlook, driven by strong domestic order book and successful project execution across various sectors. Voltas Beko saw volume growth of 59%/56% YoY in Q3FY25/9MFY25, with market share gain in refrigerators/washing machines at 5.3%/8.3%, while losses continued. We estimate FY25-27E revenue/EBITDA/PAT CAGR of 15.0%/19.5%/25.3%. We downward revise our FY25/FY26/FY27E earnings estimate by 2.1%/3.1%/4.3% factoring margin contraction in the UCP segment. Upgrade to BUY.

We are upgrading our recommendation from ACCUMULATE to BUY given the recent significant correction in stock price. However, we revise SOTP-based TP to Rs1,593 (down from Rs1,980), implying PE of 40x FY27E earnings.

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