A leading air conditioner manufacturer known for its strong market presence is facing challenges this festive season. Prolonged monsoons and weak consumer demand have led to inventory buildups and falling sales. Despite hopes of a GST rate cut boost, brokerages warn of potential further stock declines of up to 21% in the coming months.
Voltas Limited’s stock, with a market capitalisation of Rs. 45,182 crores, fell to Rs. 1,355, hitting a low of up to 1.3 percent from its previous closing price of Rs. 1,372.70. Furthermore, the stock over the past year has given a return of 28.7 percent.
3 Brokerage and their Outlook
1. Nuvama
Nuvama Institutional Equities has kept a ‘Reduce’ rating on Voltas with a target price of Rs 1,070, implying a 21% downside from current levels. The firm noted that sales across major categories are likely to stay weak in the second quarter of FY26, while last year’s strong sales will create a high base effect, making this year’s growth look weaker and adding further pressure on performance.
Nuvama expects demand for Voltas to pick up in Q3FY26, driven by GST rate cuts and the festive season, which could lead to pent-up buying. The company is also working on improving margins by taking quick and clear steps to build a stronger and more efficient cost base, with benefits likely to be seen in the coming quarters.
In addition, the upcoming BEE rating change from January 1, 2026, could trigger some restocking. This change relates to revised energy efficiency standards by the Bureau of Energy Efficiency, which often lowers star ratings for certain AC models, making them less efficient compared to new standards and potentially pushing customers to upgrade. More clarity on its impact is expected by October 2025.
2. Elara Capital
Elara Capital downgraded Voltas to a ‘Reduce’ rating from ‘Accumulate’ with a target price of Rs 1,360. The brokerage also cut FY26 EPS estimates by 17% due to soft sales and margin pressure but raised FY27 and FY28 estimates slightly, expecting a sales boost from the GST push.
The target price is increased to Rs 1,360 from Rs 1,280, citing the company’s strong market leadership in the room air conditioner (RAC) segment and stable pricing despite demand being weaker than expected so far. This indicates confidence in the brand’s long-term positioning, even though near-term demand challenges remain.
However, management expects a sharp slowdown in Q2FY26 for the RAC segment, mainly due to weak summer demand and the GST rate cut announcement, which has pushed customer buying to Q3FY26. Elara also noted that the upcoming BEE norms change could increase costs by 3-5%, prompting Voltas to clear inventory by November. This delay in demand and higher costs are likely to pressure margins in the short term.
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3. JM Financial
JM Financial has initiated a Hold rating from Add, citing structural weakness in the business. It noted that air conditioner prices are expected to drop by 7-8% due to GST cuts, but the impact on consumer demand from these price reductions is still uncertain.
JM Financial noted that despite an upgrade, Voltas continues to face challenges in Q2 due to weak weather-driven demand, high inventory levels, and customers delaying purchases ahead of the GST rate cuts. While AC prices are expected to fall by 7-8% with the GST change, the extent of consumer response remains uncertain. Stocking decisions ahead of the upcoming energy rating norm changes will also depend on how quickly channel inventory clears during the festive season.
The brokerage also highlighted that Voltas’ market share has slipped from 22% to 18% amid intense competition. Although the company is trying to regain ground through better cost efficiency, stronger channel presence, and a broader product portfolio, this structural weakness has been an ongoing concern.
Written By Fazal Ul Vahab C H
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