Voltas maintains a leadership position in RAC with ~19% market share and benefits from the ramp-up of its Chennai facility. However, a delayed summer and unfavorable weather conditions have adversely impacted growth for the UCP segment.
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Motilal Oswal Report
Voltas Ltd. reported a robust performance in FY25, with strong growth in the unitary cooling product segment and healthy margins. The company maintains a leadership position in RAC with ~19% market share and benefits from the ramp-up of its Chennai facility.
However, a delayed summer and unfavorable weather conditions have adversely impacted growth for the UCP segment.
Considering demand moderation, we estimate Voltas' revenue/Ebitda/PAT CAGR at ~7%/12%/15% over FY25-27. We estimate the UCP segment's margin to stand at 8.0% in FY26 (vs 8.4% in FY25), though demand recovery will be crucial in H2 FY26, led by the festive season and change in energy rating norms.
We downgrade our rating to Neutral from Buy due to a decline in demand, near-term headwinds, and challenges in the project business.
We revise our target price to Rs 1,350 (earlier Rs 1,600) based on 45x FY27E EPS for the UCP segment, 20x FY27E EPS for the PES and EMPS segments, and Rs 22/share for Voltbek.
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