Voltas slips 4%, Nomura downgrades on AC sales slowdown

Moneycontrol Bureau

Shares of Voltas slipped 4 percent intraday on Tuesday as Nomura has downgraded it to reduce with a reduced target of Rs 265 per share. The brokerage has also cut FY16 earnings per share (EPS) estimate by 12-16 percent to factor in weaker growth in room AC sales as well as further delays in the electro-mechanical projects (EMP) segment’s recovery.

Voltas has outperformed the market significantly over the past two months and is up 30 percent during the period. However, with potential weaker results and slowdown in AC sales brokerage does not seem to be impressed with Voltas.

“Gains in the unitary cooling products (UCP) segment  like AC segment made up for Voltas’ underperformance in the EMP segment. However, our recent dealer checks suggest that room AC sales are slowing and are being accompanied by discounts and free installations by competitors, leading to risk of market share/margin loss for Voltas,” Nomura says in a report.