The home appliances market is showing signs of recovery, with Voltas being a key player. Recent interactions with the company's management have provided valuable insights into the current demand trends and the impact of upcoming energy label changes.
Current Demand Trends and Challenges
Voltas reported that the room air conditioner (RAC) volume remained under pressure in the third quarter of FY26 due to higher channel inventory and a strong winter season. However, the year-over-year decline has moderated, and there are multiple factors that could drive demand going forward, including a potential GST rate cut and energy label changes.
Voltas Beko and EPM Segment Performance
Voltas Beko continues to outperform, gaining market share and nearing the number one position in semi-automatic washing machines. The EPM segment is also doing well, with a steady margin given good project selection in the domestic project business.
Outlook and Recommendations
Given the current trends and developments, earnings estimates are being maintained. The focus is on closely monitoring the pickup in RAC demand and normalization of inventory. The Neutral rating on the stock is being maintained, with a target price of INR1,390 based on the sum of the parts (SoTP) valuation.
Remember, this is a perspective, not a prediction. It's essential to do your own research and consider multiple viewpoints before making any investment decisions. The home appliances market and Voltas' stock performance can be influenced by various factors, including economic conditions, consumer behavior, and government policies.
Key Takeaways
- Voltas' RAC volume was under pressure in 3QFY26 due to higher channel inventory and a strong winter season.
- The company's earnings estimates are being maintained, with a focus on monitoring RAC demand and inventory normalization.
- Voltas Beko is outperforming, gaining market share in semi-automatic washing machines.
- The EPM segment is doing well, with a steady margin in the domestic project business.
- The Neutral rating on the stock is being maintained, with a target price of INR1,390 based on SoTP valuation.