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Motilal Oswal Report
Voltas Ltd.'s Q1 FY25 performance was above our estimates, led by higher-than-estimated revenue growth in the unitary cooling product and electro mechanical projects segments, and a profit in EMPS versus our estimate of a loss.
Revenue stood at Rs 49.2 billion versus estimate Rs 39.4 billion. Ebitda was Rs 4.2 billion versus estimate Rs 2.6 billion. Operating profit margin surged 3.1% YoY to 8.6% (estimate: 6.6%). Adjusted profit after tax jumped 159% YoY to Rs 3.3 billion (estimate: Rs 1.9 billion).
The management indicated that UCP's overall volume grew 67% YoY in Q1, and it maintained its leadership position in the room AC segment with an exit market share of 21.2% as of June-24.
In EMPS, domestic projects continued to grow, and the outlook remains positive. Whereas, in the international project, the UAE and Saudi Arabia have delivered good performance leading to revenue growth, which, along with strong execution and controlled costs, has led to profits following losses in the last six quarters.
We raise our EPS estimates by 19%/4% for FY25/FY26 led by strong revenue growth and Q1 performance. We also introduce FY27 estimates. We would keenly monitor the continuity of profitability in the EMPS segment.
We reiterate our Buy rating on the stock with a revised target price of Rs 1,800 (versus Rs 1,670) based on 50 times Sep'26E EPS for the UCP segment, 35 times Sep'26E EPS for the PES and EMPS segments, and Rs 38/share for Voltbek.
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