Voltas Ltd. share price target

Voltas (VOLT)’s 1QFY25 performance was above our estimates, led by higher-than-estimated revenue growth in the UCP and EMPS segments, and a profit in EMPS vs. our estimate of a loss.

Despite denting market share, VOLT notched sales of more than 2mn AC units

KECI: Good quarter, T&D to pull topline and margins; upgrade to BUY. ACEM: Cost savings key driver; upside priced in, retain HOLD. LPC: Stable margins; higher tax weighs on PAT. VOLT: Margins falter; domestic business promising. MPHL: Modest growth; BFSI yet to pick up. BRIT: Expect strong volume growth ahead. DRRD: Driven by North America; India continues to underperform

Key observations: (1) Unitary cooling products (UCP) segment has reported a strong 44.2% revenue growth (higher than Blue Star and Havells – Lloyd).

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.