Voltas Ltd. share price target

MSIL: Healthy all-round performance raise to BUY. DRRD: Buoyant US sales drive performance. VOLT: UCP improving, Qatar business a dampener. DIXON: Mobile business dials up growth; maintain BUY. KJC: Soft demand, intense competition mar quarter. BLSTR: Purple patch continues; maintain BUY. KECI: Pipeline robust, margin improvement delayed. ABSLAMC: Double-digit growth but market share bleed continues. Metals & Mining: Jindal Stainless: Management meet takeaways

Three observations from Q2FY24: (1) The RAC segment will likely go through a phase of low RoCE with strong increase in production capacity. While PLI benefits may provide relief in the interim, we model steep competition and excess capacity to hurt RoCE. (2) The B2B market is growing at healthy pace with revival in capex cycle but it is likely to result in lower margins considering excess provisioning in some of the international projects in near term.

Q2 mixed with UCP performing well (+ 15% YoY) but EMP continuing to post losses due to collection disputes

We believe 15% YoY volume growth in a quarter with unfavourable weather conditions indicates early signs of revival in Unitary cooling products segment for Voltas. The company faced dual challenges over past three years such as (1) market share erosion due to steep competitive pressures and (2) reduction in margins due to steep increase in commodity prices.