Neutral Voltas; target of Rs 1350: Motilal Oswal

Motilal Oswal's research report on Voltas

We interacted with the management of Voltas (VOLT) to gain insights into the current demand trends, the company’s strategy amid challenging conditions, and segmental performance. The management believes that unfavorable weather conditions led to ~20-25% YoY decline in industry RAC demand during Apr-May’25, with VOLT reflecting a similar trend. While North India saw some recovery in Jun’25 due to rising heatwaves, it remains watchful on the outlook given the evolving weather conditions. In view of this, we have reduced our FY26/FY27 UCP revenue by ~14% each and trimmed the UCP segment margin by ~80bp/40bp. As a result, our FY26/FY27 EPS estimates have been reduced by ~17%/14%.

Outlook

We downgrade our rating to Neutral from BUY with a revised TP of INR1,350 (earlier INR1,600) based on 45x FY27E EPS for the UCP segment, 20x FY27E EPS for the PES and EMPS segments, and INR22/share for Voltbek.