Voltas Well Positioned For Long-Term Growth But High Valuations A Concern: SEBI RIA Cashvisory India

Voltas is well-positioned for long-term growth, driven by strong demand, B2B tailwinds, and capacity expansion, making it an attractive pick, though the stock's high valuations warrant caution, said SEBI-registered investment adviser Cashvisory India.

The stock trades at a high valuation, with a P/E (price-to-earnings) ratio of 52.

Voltas has reported a 24% increase in FY25 revenue at ₹15,737 crore, while profit after tax (PAT) soared 236% to ₹834 crore, the highest in their history.

The strong performance was driven by its Unitary Cooling Products (UCP) segment, which includes air conditioners and coolers.

The UCP business reported a 30% increase in revenue, boosted by the Room Air Conditioner (RAC) category, which commands around 19% market share.

A higher share of its premium products and the ramp-up at its Chennai plant helped the UCP segment achieve margins of around 10%, the investment advisor noted.

Voltas' Projects business made a strong turnaround, posting a ₹169 crore profit compared to a ₹328 crore loss last year. This was backed by an order book exceeding ₹6,500 crore.

Meanwhile, Voltas Beko recorded 57% volume growth and climbed to the no. 2 position in the semi-automatic washing machine segment.

However, the investment advisor said that challenges remain despite Voltas' favorable numbers.

The investment advisor said the RAC segment is currently under short-term pressure due to a delayed summer and intensifying competition from over 60 brands. 

Commercial refrigeration has also been affected by weak capex trends and inventory corrections.

Data on Stocktwits shows that retail sentiment turned 'bearish' a week ago. 

At the time of writing, the Voltas shares were up around 0.7% at ₹1,320. Year-to-date, the stock has shed 26.4%.

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