Voltas share price is in focus today after recommendations from multiple brokerages with target prices reflecting upside ranging from 4% to 34%. Many of the brokerages have trimmed their earnings estimates despite Voltas increasing prices of its products twice on account of the ongoing West Asia tension.
Nuvama Institutional Equities has upgraded its rating on the stock to ‘Hold’ from ‘Reduce’. Global brokerage house Jefferies has retained its ‘Buy’ recommendation. Domestic brokerage house Motilal Oswal has maintained its ‘Neutral’ rating on the stock while Emkay Global rated the stock ‘Buy’.
Here is a detailed analysis of the investment rationale driving the brokerage views
Jefferies on Voltas
Despite Voltas taking total price hikes of around 12% this year, Jefferies expects the rise in input costs amid the war in West Asia to put pressure on the company’s margins. Jefferies has reduced its FY28-FY29 estimated earnings per share estimate for Voltas by 5% while FY27 estimate has been cut by 9% due to lower margins during peak summer.
They have set a target of Rs 1,495, implying over 33% upside from current levels.
The company remained focused on driving sales and market share gains. It has witnessed good traction this month so far, with expected 15% to 20% growth in secondary sales. The brokerage expects Voltas’ revenue to grow 14% compounded annual growth rate by FY29 over FY27 and EBITDA at 24% CAGR over the same period. It sees weaker festive demand, further supply chain disruptions, and sharper raw material volatility as the key risks for its outlook.
Voltas’ standalone market share in July was 18.6%, reflecting a gap of 600 basis points between the second largest competitor. The company’s channel inventory is around 30 days currently, compared to 50-60 days a year ago. “This can drive primary sales in upcoming quarters,” the brokerage said.
Nuvama on Voltas
The company is prioritising market share and absolute profit growth over margin in the unitary cooling products segment. Its management also highlighted the prototype establishment under Atomberg JV for compressors and significant data centre opportunities over the next 2-3 years.
However, Nuvama reduced its earnings per share estimates for the company due to margin headwinds. It lowered FY27 estimated EPS by 10% and FY28 by 9%. It has a target price of Rs 1,220 for the stock, implying an upside of nearly 9% from current levels.
“Management indicated 15–20% growth YoY in secondary sales in Q2FY27 for RAC (room air conditioner) players with Voltas outpacing peers. Channel inventory is now below 30 days in most places. Voltas Vertis (positioned as ’better’) was 47% of sales this year versus 15% 18 months ago with significant efforts on improvement in portfolio/features and branding initiatives (industry mix is 45–50% of total volumes),” Nuvama highlighted.
The company aims to sustain a large lead over competitors in the future as well. “Having said that, market share and absolute profit growth, rather than a specific margin target, remain two key objectives for Voltas’s unitary business,” the brokerage said.
Motilal Oswal on Voltas
“We estimate a CAGR of ~14%/46%/57% in VOLT’s (Voltas) revenue/EBITDA/PAT over FY26-28, albeit on a low base. In UCP, we estimate a revenue CAGR of 18% over FY26-28 and margin of 6%/7% in FY27/FY28 (vs. 3.2% in FY26),” Motilal Oswal said.
Its target price for the stock is at Rs 1,170, implying an upside of 4% from current levels. Voltas remains constructive on the long term opportunities in RACs, supported by low penetration and rising incomes.
“The broader strategy is to develop multiple growth engines beyond RAC by scaling up across commercial AC, commercial refrigeration, appliances, data centers, MEP, and international operations. The focus is on building the necessary manufacturing capacity, product capability, distribution network and service infrastructure across each vertical,” Motilal Oswal added.
Emkay on Voltas
Emkay also highlighted near-term pressure on Voltas margins due to rising competition in the sector and commodity price volatility.
“Management is explicitly following a growth-over-margin mindset, prioritizing absolute EBIT/share gains over margins. Beyond core RAC, multiple avenues are scaling, such as commercial ACs/chillers, domestic MEP with data centers as a new vertical with faster capital turns, exports , Beko refrigerators and the Atomberg compressor JV,” Emkay elaborated.
Emkay has kept the EPS estimates for FY28 and FY29 largely unchanged. They retained ‘Buy’ rating with a target price of Rs 1,500. This indicated an upside of nearly 34% from current levels. “Valuations are also attractive at 2.2x implied UCP P/S (below -1SD),” the brokerage highlighted.
Voltas: Market share gain, profitability
Voltas is currently prioritising market share gains and profitability in the room air conditioner (RAC) segment, and expects improvement in margins to be a gradual process, as per brokerage reports. Channel inventory for RAC remains healthy at below one month. The company’s volume growth in the RAC segment is in high teens across primary and secondary sales, supported by a low base.
“Management highlighted that RAC secondary demand is healthy, with industry growth in high teens, and VOLT is performing slightly better than the industry,” Motilal Oswal pointed out. The upcoming festival season is expected to benefit primary stocking across categories, with refrigerators, washing machines, small domestic appliances, TVs, and mobiles likely to see higher festive stocking.
The company indicated that consumer sentiment remains important in its decision to increase prices, especially after the 2 instances, and “its ability to pass on the entire rise in input costs may be limited,” Motilal Oswal said.
Voltas Atomberg JV
The Voltas-Atomberg joint venture is the other key factor playing on investor sentiment. “Initially, this would cater to 15–20% of Voltas’ own compressor requirement. Management indicated that Voltas will face no restriction on compressor imports given commitment to domestic compressor manufacturing; while the current QCO permits imports of up to 30% of FY25 volumes, companies undertaking domestic manufacturing are exempt from this cap,” said Nuvama.
What next for investors
Most brokerages believe that Voltas’ margins could be under pressure in the near-term due to rising competition in the sector and commodity price volatility. However, they are optimistic about demand picking up in the upcoming festive season.
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.