Hold Voltas of Rs 872: Emkay Global Financial

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26 Aug, 2025 12:21

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Emkay Global Financial's research report on Voltas

Voltas reported sales growth of ~12% YoY for the quarter, on the back of strong execution in the projects business (17% YoY growth) and 12% YoY growth in the Cooling products segment in a seasonally-weak quarter. Sales was ahead of Consensus’ estimates. EBITDAM at 3.8% for the quarter was below Consensus and our estimates of ~7%, due to loss (of Rs410mn) in the EMPS segment. This was mainly due to delayed certification, along with new projects not crossing margin-recognition. Further, in one of its overseas projects, Voltas’ main contractor unilaterally encashed the underlying bank guarantee which resulted in additional loss reported as exceptional. EBIT margin for the UCP segment at 7.4% was largely in line with the 1HFY23 margin.

Outlook

We cut our FY24E/FY25E EPS by 7.5%/6%, respectively, as we factor in the lower margin levels. Our Mar-24E TP now stands at Rs872/share. We maintain HOLD on the stock. We believe the company needs to stabilize and up its performance in both, the UCP and EMPS segments in coming quarters, for a re-rating. While the order book in EMPS remains strong, profitable execution is key. Similarly, losing market share in the RAC market has had a twin adverse impact – lower-than-market growth; margin below that in the recent past.

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Voltas - 14 -02 - 2023 - emkay