Voltas stock falls after Q1 results; margins miss estimates
Voltas recorded a revenue rise of 19% in Q1, lagging consensus, with EBITDA margin at 5.7% and PAT at ₹213 crore. The company nudges toward long-term margin targets of 7%+, while UCP margins beat year-ago levels. Brokerages offered mixed views with targets around ₹1,357–₹1,560 and various rating sta
Key takeaways
- Voltas’s June quarter revenue increased 19% year over year, below market expectations of roughly 28%.
- EBITDA margin expanded to 5.7% but missed street estimates of 6.3%. Management aims for 7%+ margins over the long term with a potential recovery starting later this year.
- UCP segment delivered 32% revenue growth and 5.3% margins, up from a year ago.
- PAT rose 52% to ₹213 crore but still fell short of analyst estimates around ₹217 crore.
- Voltas disclosed a joint venture with Atomberg Innovation to produce high-efficiency RAC compressors, targeting 2.8 million units.
What Happened
Voltas reported its first-quarter results after market hours on a Friday, with shares moving lower on Monday in response to the numbers. The June quarter showed revenue up 19% year over year, which was below the CNBC-TV18 poll projecting 28% growth. EBITDA margin rose to 5.7% from a year earlier (a 120 basis point improvement) but remained below street estimates of 6.3%. The management signaled an aim to push margins toward the 7%-plus level over the long term and expected a recovery to begin from the third or fourth quarter of the current financial year.
In the unitary cooling products (UCP) segment, revenue increased 32% year over year, and margins expanded by 170 basis points to 5.3% from the prior year. Profit after tax rose 52% to ₹213 crore from ₹140 crore a year ago, but came in short of street expectations of ₹217 crore.
The brokerage community responded with mixed views. Citi maintained a buy rating with a ₹1,550 target, UBS also rated the stock as a buy with a ₹1,560 target, CLSA assigned an underperform rating with a ₹1,160 target, and Nomura kept a neutral stance with a ₹1,357 target. Citi highlighted RAC volume growth of 45% and a 17.3% secondary-market share for the current fiscal, while noting anticipated cost pressures and a plan to pass them through along with channel-scheme reductions to support margins. UBS cited a miss to UBS estimates on revenue and EBITDA but a beat on PAT driven by higher other income, and said UCP margins are expected to improve aided by price hikes, scale benefits, and cost savings, targeting a gradual return to 7% margins. UBS also noted a shift in the MEP business toward faster-generation private-sector projects with healthier cash flows. CLSA pointed to strong RAC growth but noted margins remained under pressure due to low project growth. Nomura maintained that competition could delay margin recovery, with its view on AC industry growth for FY27 and FY28.
Additionally, Voltas announced a joint venture with Atomberg Innovation to develop and manufacture high-efficiency RAC compressors in India, and the Atomberg JV is targeting a capacity of 2.8 million units. In Voltas Beko, management noted that EBITDA breakeven for FY27 may slip by a few quarters due to commodity inflation.
Sources reviewed
Project Chintan independently synthesized and analyzed information cross-checked across the sources listed above.
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