Voltas: Weak Summer Caused Decline in Revenue in the June Quarter

Voltas’ revenue declined 20% YoY to INR 39.38bn, mainly as a weak summer impacted the unitary cooling products segment (UCP), which saw a 25% decline. Gross margin expanded 90bps YoY to 21.8%. EBITDA Margin declined 410bps YoY to 4.5% (-240bps QoQ) due to an increase in employee and other expenses.

EBITDA declined 58% YoY, owing to op-lev loss, leading to 58% decline in Adjusted PAT. In Q1, the company’s RAC (Room Air Conditioner) market share was 17.8% (vs 19.5% YoY). However, it highlighted its exit rate in June has improved to 19.3% market share.

Management flagged high RAC channel inventory will likely pressure Q2 but expects Q3 recovery on festive demand and regulatory changes. Considering the weak Q1 and elevated channel inventory, we cut our revenue estimates by 7/5% and APAT estimates by 18/6% for FY26/27E respectively. As there is limited upside from current level, we downgrade Voltas to ADD from Buy, valuing the stock at 40x Mar-27E EPS to arrive at a TP of INR 1,315/sh.

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Source: HDFC Securities Institutional Equities

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