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Dolat Capital Report
Voltas Ltd.'s Q3 FY23 revenue was ahead of our estimate, with 11% growth in unitary cooling product despite a seasonally weak quarter.
Positive impact of softening raw material prices was marred by currency depreciation. Due to intense competition, Voltas refrained from taking price hikes in Q3/Q4 FY23 and absorbed entire cost increase related to energy upgradation.
UCP margins have been declining for the seventh consecutive quarter (YoY basis) to 7.4% in Q3 FY23 from average ~12%. Management expects single digit margin trend in UCP to continue in Q4, with sequential improvement.
In projects business, carry forward order book improved to Rs 75.4 billion in Dec 2022 from Rs 59.8 billion as of Sep-22, giving fair revenue visibility.
We maintain a cautious stance as commodity prices have started inching up again. While we expect healthy volume offtake in room air conditioner in upcoming summer, focus on protecting market share will continue to pressurise margins.
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