Shares of Voltas Ltd declined nearly 3% on Friday after brokerage firm Prabhudas Lilladher downgraded the stock to ‘Accumulate’ from ‘Buy,’ citing the recent run-up in share price.
The brokerage attended an analyst conference call where Voltas outlined its growth strategy, focusing on outperforming industry trends, optimizing manufacturing capacity, and strengthening its distribution and marketing investments. However, the company did not announce any major price hikes, opting to maintain its market share instead.
Voltas remains committed to volume growth and market expansion over immediate margin improvement. The company’s consumer durables subsidiary, Voltbek, is expected to achieve EBITDA breakeven by early FY26. Prabhudas Lilladher projects Voltas’ revenue, EBITDA, and PAT to grow at a CAGR of 15.0%, 19.5%, and 25.3% respectively over FY25-27E.
Key insights from the report:
- Voltas expects temporary market share contraction in Q1 due to regional demand trends, with improvement expected as summer demand shifts to North India.
- The company is investing in expanding its sales channels, including organized retail and large-format stores.
- No immediate price hikes are planned as the company prioritizes affordability and sales volume.
- The government is considering easing BIS certification norms for compressors, which could be beneficial for the industry.
- Voltas is evaluating domestic manufacturing partnerships for compressors and has applied for PLI benefits.
Despite these strategic moves, Prabhudas Lilladher has maintained its target price for Voltas at ₹1,593, valuing the stock at 40x FY27E earnings.
Financial outlook:
- The stock is currently trading at 45x/37x FY26/FY27E earnings estimates.
- Revenue is expected to grow from ₹1,24,812 crore in FY24 to ₹2,08,054 crore by FY27E.
- EBITDA margins are projected to expand from 3.8% in FY24 to 7.7% in FY27E.
- PAT is estimated to grow from ₹2,520 crore in FY24 to ₹13,323 crore in FY27E.
Market reaction:
Following the downgrade, Voltas’ shares fell 2.71% to ₹1,430.10 on the NSE, reflecting investor caution regarding the brokerage’s revised recommendation.
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