Voltas shares surged over 3% in trade today, reaching an intraday high of Rs 1,597.65 compared to the previous close of Rs 1,535.15. Voltas stock today surged on the back of the company’s impressive Q1FY25 earnings report. The positive performance is further supported by Voltas maintaining its high-single digit UCP margin guidance for FY25.
Brokerages have responded favorably to the company’s results, with several firms adjusting their ratings and target prices upward.
CLSA has updated its outlook on Voltas, raising its target price to Rs 1,310. CLSA noted that despite a strong first quarter where Voltas regained some lost market share, margins have softened. The projects segment saw a rebound in margins without additional provisions, although guidance remains steady. The market share increase in the appliances joint venture, VoltBek, has been promising. However, CLSA points out that the valuation of the RAC segment, which stands at approximately 58 times FY26 projected earnings, suggests limited potential for further re-rating.
Jefferies has a Buy rating with a revised target price of Rs 1,770. Jefferies highlights that Voltas’ Q1 performance was driven by a 67% year-over-year volume growth in the UCP segment, which constitutes 77% of Q1 sales. The company’s leadership position in the market has been reinforced, with a 250 basis points quarter-over-quarter increase in market share, reaching 21%. Additionally, the EMP (B2B) segment reported a positive EBIT margin after several quarters of losses, and the air coolers segment saw market share rise to 10.5% from 7.2% in March 2023. Jefferies has also raised its FY25-26 EPS estimates by 10-12%.
UBS has also turned bullish on Voltas, raising its target price to Rs 1,960. UBS commends Voltas for its strengthened position in the room AC segment, bolstered by a robust supply chain and distribution network. As of June 2024, Voltas’ market share was at 21.2%, significantly ahead of the number two brand. The year-to-date market share stands at 19.5%, a 450 basis points lead over the competition. Although the management anticipates a lean period in Q2, they remain optimistic about demand for VoltBek products in Q3FY25, driven by festive spending.
