Hold Voltas; target of Rs 831: Prabhudas Lilladher

Prabhudas Lilladher's research report on Voltas

Voltas (VOLT) has reported reverse trend in its RAC market share, reach to 20.6% at the end of Jun-23 (vs 18.2% in Feb/Apr-23) driven by incentive schemes across sales channel, healthy tie ups with modern trade and organized channels, growing network of EBOs, which is directionally positive for company. Also, it reported volume growth of 15% in RAC mainly with aggressive consumer finance schemes, wide SKUs, strong channel & network presence coupled with revival of the demand in Jun-23 while price competition continue in sector. Management expects good volume growth in upcoming festive season and we believe with competitive pricing, margins will be impacted. Besides that - challenges related lower margins in project business and losses in Beko JV, will also continue. Yet better traction in order flow from domestic project business and healthy order book of Rs 81.9bn provides visibility for EMPS segment.

Outlook

We estimate FY23-25E Sales/EBITDA/PAT CAGR of 14.2%/30.2%/43.8%, with RAC volume CAGR of 12.0% and EBITDA margin of 7.8% in FY25E. Maintain to ‘HOLD’ at SOTP based revised TP of Rs831 (earlier Rs 813).