Target: ₹1,420
CMP: ₹1,289.85
We attended Voltas’ analyst group meeting on June 17. Management noted a ~20-25 per cent y-o-y Room Air Conditioner (RAC) volume decline across both the industry and company in April and May, due to the early monsoon onset. June has shown some recovery in some parts of the northern market.
Current channel inventory remains high at 6-8 weeks for the company. Despite weak demand, prices have remained stable, although the industry is offering free installation and other incentives. The Electro-Mechanical Projects and Services (EMPS) is exercising caution regarding its international business, anticipating that growth in this region will take time. While domestic EMPS business is expected to register slow growth in FY26, it is expected to pick up in FY27. Beko joint venture has recorded growth in Q1FY26 to date.
The company is focused on gaining market share and reducing losses, aiming to contain Beko EBITDAM at -5 per cent in FY26. We model a CAGR of 10 per cent for revenue, 15 per cent for EBITDA, and 17 per cent for APAT over FY25-27E.
We maintain Buy on Voltas with a lower SOTP target price of ₹1,420/share (about 40x Mar-27E EPS).