Vivek Iyer retweetledi
HSBC om Voltas
Buy, TP Rs 1500
FY26 results: 4Q margins disappoint more than topline miss, mainly from increased commodity cost and higher FX
However, pricing action and cost reduction measures should usher in a gradual recovery in coming quarters
Key takeaways from earnings call
1) RAC outlook: management expects improved performance versus last year, supported by strong April–May demand.
2) Pricing: highlighted double-digit input cost inflation (including commodities and FX) & indicated further price increases will be implemented progressively as higher costs flow
through.
3) Margin trajectory: gradual improvement, moving towards FY25 level over time.
4) CAC growth: CAC is positioned as a key medium-term growth driver, supported by infrastructure build-out and rising demand from sectors such as
manufacturing and data centres.
5) VoltBek: Continued focus on premiumisation, innovation, localisation, and distribution expansion to improve penetration & operating leverage over medium term
CITI on Voltas
Buy, TP cut to Rs 1550 from Rs 1900
Commodity & currency impact led to sharp decline in UCP margin (-499bps YoY to 5%) resulting in overall EBITDA declining 40% YoY (37% below Citi est).
Management highlighted
(a) margins to improve progressively to FY25 levels (8.4% vs 3.2% in FY26) supported by demand and price hikes;
(b) RAC demand in April and May so far has been strong;
(c) channel inventory levels have reduced drastically to ~30days;
(d) Voltas’ primary market share gap vs the next cluster of 4 competitors was ~5.1%;
(e) already taken 9-12% price hike in 4Q post which there has been double-digit inflation in cost and further price hike to follow
Cut FY27/28E revenue estimates by 12%/11%, EPS by 36%/15% & target multiple to 45x Mar’28E P/E
Kotak Inst Eqt on Voltas
Sell, TP Rs 1025
Voltas’ 1% yoy growth in UCP and EBIT margin of 5% (before forex losses) were underwhelming
Margin print was weak despite 4Q having some contribution from old BEE-rated inventory
Expect material margin headwinds ahead, especially considering that quantum of price hikes (2-3% for inflation) is significantly lagging RM inflation
Cut FY2027/28E EPS by 19%/8%
@CNBCTV18News @VivekIyer72
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