Target: ₹1,660
CMP: ₹1,659.75
Voltas has reported strong top-line growth (46 per cent y-o-y, 15 per cent above BNPPEe), led by continued growth momentum in Unitary Cooling Products (51 per cent) and EMP (40 per cent) segments. Electro-Mechanical Projects’ EBIT margin (7.1 per cent) turned positive after six quarters, which drove an overall 310 bp y-o-y EBITDA margin expansion to 8.6 per cent.
PAT was up 2.6x to ₹330 crore (40 per cent/44 per cent) ahead of Bloomberg consensus/BNPPEe).
Voltas focus remained on maintaining its market leadership across categories and drive further volume growth. Management retained its guidance for high single-digit EBIT margins in the UCP division, amid stiffer competition, rise in commodity prices and currency depreciation. Management seemed cautiously optimistic with the start of seasonally lean quarters, though inventory levels remain low in trade channels.
The Voltbek JV continued to perform well with 50 per cent+ y-o-y volume growth, with the company aiming to achieve EBITDA break-even in the near future.
We prefer Voltas as the best play in the under-penetrated RAC industry and is on track to be a pure- play white goods company. Factoring in the Q1 beat, we raise our FY25-27E EPS by 8-9 per cent. Our SoTP-based TP rises by 6 per cent to ₹1,660.