Hold Voltas; target of Rs 1268: Prabhudas Lilladher

Prabhudas Lilladher's research report on Voltas

We downward revise our FY26/FY27E earnings estimate by 18.5%/6.2% factoring in correction in aggregate volume in UCP while margins are expected to be at 5% due to promotional offers aimed at liquidating inventory, high fixed costs from low plant utilization, and increases in cost due to BEE norms. Anticipating strong demand, Voltas’s trade partners had built up inventory; however, softer secondary sales led to slower off-take and elevated stock levels, prompting the company to temporarily scale back production. UCP EBIT margins contracted due to focus on driving volumes through aggressive pricing and higher promotional spends along with low plant utilization. VOLT market share has declined in RAC segment (YTD market share of 17.8% as on Jun’25 vs 19.0% as on Mar’25). Company is optimistic in H2FY26 with festive-led demand and recovery expected, supported by inventory normalization and cost improvement initiatives across business verticals.

Outlook

Voltas Beko saw volume growth of 33% Q1FY26, led by better product mix and market share gains in refrigerators and washing machines. We estimate FY25-27E revenue/EBITDA/PAT CAGR of 9.0%/11.6%/14.6%. we revise SOTP-based TP to Rs1,268 (earlier Rs1,350), implying PE of 38x FY27E earnings. Maintain ‘HOLD’ rating