Buy Voltas; target of Rs 1710: Motilal Oswal

Motilal Oswal's research report on Voltas

We interacted with the management of Voltas (VOLT) to gain insights into current demand trends, as well as its views on compressors, margins, market share, and more. Management believes that current demand trends for RAC remain strong, and its focus will be on growing faster than its peers. While market share will be prioritized over margins, it aims to increase value engineering to save costs and protect margins, rather than opting for price hikes, which could impact margins. The government has relaxed import norms for compressors above 2 tons (~10% of the industry's volumes) and the industry is awaiting approvals for compressors below 2 tons.

Outlook

We expect VOLT to benefit from a strong start to the summer season and anticipate the UCP segment's margin to be ~7.5% in 4QFY24. We reiterate Buy on the stock with a TP of 1,710 based on SOTP.

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