Voltas, a major player in the Indian stock market, has been facing challenges in the RAC industry, but the company's management is looking forward to a gradual normalization in the coming quarters. With growth visibility improving into FY27, contingent on summer demand and cost improvement actions, Voltas is poised for a potential rally.
Voltas' Current Situation
The company has been experiencing continued weakness in the RAC industry, elevated channel inventory, and sustained margin pressures in the near term. However, there are early signs of channel pre-stocking ahead of BEE norm change and medium-term growth levers across non-RAC cooling categories, EMPS and Engineering Products.
Growth Prospects
Voltas expects a revenue/EBITDA/PAT CAGR of 9.0%/9.9%/12.1% for FY25-28E, indicating a positive growth trajectory. The company's subsidiary, Voltbek, has continued to show growth momentum with market share gains across its key products.
Stock Performance
The stock is currently trading at 47x/39x FY27/FY28E, and the target price has been tweaked to Rs1,415, implying a PE of 39x FY28E. With a 'HOLD' rating, investors are advised to keep a close eye on the stock's performance.
Key Takeaways
- Voltas' growth visibility is improving into FY27, contingent on summer demand and cost improvement actions.
- Voltbek's growth momentum is expected to continue, with market share gains across its key products.
- The stock's current valuation is at 47x/39x FY27/FY28E, with a target price of Rs1,415.
Remember, this is a perspective, not a prediction. It's essential to do your own research and consider your investment goals and risk tolerance before making any decisions.