Voltas Ltd.'s second-quarter earnings plunged, weighed down by heavy monsoon and GST-related demand deferment, which impacted retail offtake and margins. The decline was sharper than street expectations.
Consolidated revenue from operations dropped 10% in the July-September quarter to Rs 2,347 crore, compared to Rs 2,619 crore in the corresponding period last year, according to results announced on Thursday. The Bloomberg consensus estimate was Rs 2,461 crore.
The Tata Group company's net profit sank 74% to Rs 34.3 crore from Rs 134 crore last year, worse than the forecast of Rs 89 crore.
Operational performance also fared poorly as Ebitda fell 56.6% and the margin more than halved.
Voltas Q2 Highlights (Consolidated, YoY)
Revenue down 10.4% to Rs 2,347 crore versus Rs 2,619 crore (Bloomberg estimate: Rs 2,461 crore).
Ebitda down 56.6% to Rs 70.3 crore versus Rs 162 crore (Bloomberg estimate: Rs 104 crore).
Margin to 3% versus 6.2% (Bloomberg estimate: 4.2%).
Net Profit down 74.4% to Rs 34.3 crore versus Rs 134 crore (Bloomberg estimate: Rs 89 crore).
The unitary cooling products segment faced muted retail offtake due to the lag effect of early monsoon and GST rate reduction (from 28% to 18%), which led to deferred purchases and higher channel inventory, Voltas said in a statement. Margins were temporarily impacted by higher marketing support and under-absorption at new facilities in Chennai and Waghodia.
The GST rate cuts kicked in from Sept. 22, just as the Dusshera-Diwali festive season started.
"The GST reduction and upcoming BEE efficiency transition will unlock pent-up consumer demand in the upcoming quarters," said Managing Director Mukundan Menon CP.
Engineering Products and Services segment maintained operational resilience, with mining and construction equipment showing stable performance and textile machinery meeting revenue and collection targets, the company said.
Shares of Voltas settled 0.6% lower at Rs 1326.6 apiece on the BSE, ahead of the earnings, compared to a flat benchmark. The stock has fallen 27% so far this year.
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