Citi expects Voltas' room air-conditioner market share to recover in the near term, citing higher primary sales and normalising channel inventory, even as the December quarter earnings remained under pressure.
The brokerage has maintained a 'buy' rating on Voltas, citing a better-than-expected performance in the unitary cooling products segment and a likely recovery in room air-conditioner market share in the near term. Citi raised its target price to Rs 1,900 from Rs 1,775, valuing the stock at 50x December 2027E P/E. The brokerage said improving project business health, stable RAC leadership and a gradual turnaround at Voltas-Beko could support further re-rating.
Citi expects growth and margin improvement to continue in the fourth quarter and into FY27, noting that the first and fourth quarters account for nearly two-thirds of Voltas' annual revenue.
Despite a weak season and elevated channel inventory, Citi said consumer products revenue grew 9% year-on-year, sharply outperforming its estimate of an 8% decline. The brokerage attributed the upside to GST reduction and pre-buying ahead of the BEE rating change. UCP margins also surprised positively at 3.8%, versus Citi's estimate of 0%, aided by better operating leverage, partly offset by higher channel support and discounting.
Market Share Likely To Improve
Citi noted that Voltas' RAC market share moderated sequentially to 17.9% in December 2025, compared with 18.5% in September, 17.8% in June and 16% in March 2025, after falling from 20.5% in December 2024. However, the brokerage expects market share to improve in the near term, supported by relatively higher primary sales in the third quarter.
With channel inventory trending towards normal levels at 5–6 weeks, and pent-up demand remaining intact, Citi said demand from the missed summer season is likely delayed rather than lost. It expects FY27 demand trends to remain strong.
Segment And Management Commentary
In UCP, Citi highlighted that there was no demand decline in January, despite December pre-buying, and expects margins to improve sequentially in the fourth quarter. Fourth-quarter sales are expected to include a mix of old and new BEE-rated products.
In the electro-mechanical projects (EMP) segment, revenue declined 18%, though margins improved 362 basis points to 8.4%. Management indicated progress in data centre projects and increased bidding activity, supported by a tie-up with an international technology partner in centrifugal chillers.
At Voltas-Beko, refrigerator and washing machine market shares stood at 6.8% and 10.2%, respectively, as of November.
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