Voltas Eyes Q3 Recovery Amid Short-Term Headwinds; Anand Rathi Retains 'Buy'

Voltas' Q1 revenue fell 20% YoY to Rs 39.4 billion as UCP revenue fell 24.6% YoY to Rs 28.7 billion, EMP revenue was down 2.9% YoY to Rs 9.2 billion, and engineering product revenue fell 15.8% YoY to Rs 1.3 billion.

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Anand Rathi Report

Hit by an erratic summer, Voltas Ltd.'s unitary cooling product fell 25% YoY in Q1, its market share down to 17.8% (June-end 19.3%). Under-absorption and higher promotions squeezed margins, while inventory was high.

Voltas Beko gained share but is still in investment mode, while Projects posted a stronger order book. Management expects Q2 weakness but sees recovery from Q3, with a longterm focus on market leadership, selective growth, and innovation.

We retain a Buy, with a 12-month target price of Rs 1,568 (earlier Rs 1,544).

Risks: Drop in its room AC market share could curb UCP margins. Steep rise in raw material prices and competition could hurt margins.

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