The shares of India’s largest air conditioner manufacturer gained nearly 5 percent to a 52-week high price of ₹1,395 per share on Monday after the global research and broking firm UBS gave a ‘buy’ recommendation with an upside of 30 percent
At 1:25 p.m., On Monday, Voltas Ltd shares were trading at ₹1,387 per share, up ₹86.55 or 6.66 percent on the National Stock Exchange from the previous close price. The company has a market capitalization of ₹45,814 crore.
Voltas is one of the leading companies within the Tata group and holds a dominant position in India’s conditioning market, with a vast network of 25,000+ customer touchpoints. Additionally, it has introduced Voltas Beko Home Appliances in India through a joint venture with Arcelik.
Over the past six months, Voltas shares have witnessed a significant 70 percent increase, while over the last 12 months, its shares have surged by 63 percent.
In comparison to the previous quarter, operational revenue increased by 31 percent, rising from ₹2,006 crore in Q3FY24 to ₹2,626 crore in Q3FY24. Additionally, net losses decreased from ₹110 crore to ₹28 crore, as reported in the company’s exchange filing.
A global research and broking firm, UBS has raised a target price to ₹1,800 from ₹ 885, representing a 30 percent increase from Monday’s trading price of ₹1,386 per share.
UBS has revised its price target for Voltas, valuing the cooling segment at 55x 12-month forward earnings, up from the previous multiple of 35x and the five-year average of 45x. The revised forecast considers potential market share gains.
According to UBS, Voltas is expected to outperform market expectations in the room air conditioner (RAC) segment, achieving a 23% market share in the financial year 2026, compared to the consensus estimate of 19.5%. UBS attributes this expected growth to Voltas’ successful supply chain optimization and improved cost structure in the RAC segment.
UBS also anticipates that the VoltBek Joint Venture will increase its market share and break even by the financial year 2026, contributing to improved profitability. The brokerage firm forecasts incremental revenue of ₹10,000 crore, representing 60% of the projected revenue for the financial year 2027 in the consumer electronics segment.
Additionally, UBS notes that Voltas’ market share and margins in the Unitary Cooling Products (UCP) segment have stabilized. The firm believes that Voltas will maintain its position as the most cost-effective room AC manufacturer, supported by its robust supply chain.
While Voltas’ shares have already seen an increase year-to-date, UBS anticipates further potential for re-rating as the company begins to capture more market share. According to UBS, Voltas’ valuations are relatively attractive compared to Bluestar. Currently, Voltas trades at a forward price-to-earnings ratio of 56x for the next 12 months, slightly higher than Bluestar’s 53x.
During the December quarter, the company’s total order book surpassed ₹8,000 crores, comprising ₹5,500 crores in domestic projects and ₹3,500 crores in international projects.
Voltas reported its highest-ever Air-Conditoners sales in FY 2023-24. The company achieved a milestone by selling over 2 million Air-Conditoners units during this fiscal year, marking the highest sales volume by any brand in India in a financial year, with a remarkable volume growth of 35%.
The company’s performance was driven by sustained demand for cooling products throughout the year, supported by the company’s robust offline and online distribution network, strong brand equity, and innovative product launches. Notably, Voltas recorded a substantial volume growth of 72% in AC sales during Q4 FY24.
Written by Omkar Chitnis
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