Hold Voltas; target of Rs 909: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Voltas

We downward revise our FY24/25E adjusted earnings by 16.6%/1.0% to factor in margin contraction in EMPS business from delay in collections and higher overhead expenses. Voltas continues to be a market leader and has sustained leadership position in overall RAC business with its exit market share of 19.5% in Aug-23 (v/s 20.6% in Jun-23) driven by 1) incentive schemes across sales channel, 2) healthy tie ups with modern trade & organized channels and 3) growing network of EBOs. The company also reported volume growth of 20% in RAC, despite lower consumer spend towards discretionary spend in a generally lean quarter. Management expects good volume growth in the upcoming festive season and expects downtrend of inflation, stagnant interest rates and fulfilling monsoon season to help revive rural demand. Voltas Beko saw a volume growth of 40% YoY, outperforming the industry.

Outlook

We estimate FY24-26E Revenue/EBITDA/PAT CAGR of 14.9%/25.1%/35.6% with RAC volume CAGR of 12.0% and EBITDA margin of 7.8% in FY26E. Maintain ‘HOLD’ at SOTP based TP of Rs909.

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Voltas - 22 - 10-2023 - prabhu