Voltas stock under pressure after Q2 loss but global brokerages expect up to 36% upside

The air conditioning and engineering services provider reported a consolidated net loss of Rs 6.04 crore in the September quarter on account of provisions for an overseas project

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Voltas share price was trading more than 3 percent lower and was one of the top midcap losers on November 3 morning after the company declared its September quarter numbers.

The air conditioning and engineering services provider reported a consolidated net loss of Rs 6.04 crore in the quarter on account of provisions made for an overseas project. The Tata group firm had posted a consolidated net profit of Rs 104.29 crore in the July-September quarter last fiscal, Voltas said in a regulatory filing.

Its revenue from operations was up 4.7 percent at Rs 1,768.36 crore during the quarter under review as against Rs 1,689.08 crore in the corresponding period of the previous fiscal.

“Profit before and after tax was impacted during the current quarter due to provision made on an overseas project,” Voltas said in its earnings statement.

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At 10.29 am, Voltas was quoting at Rs 878.30, down Rs 31.95, or 3.51 percent, on BSE. It touched an intraday high of Rs 908.45 and an intraday low of Rs 876.80.

Japanese research firm Nomura has upgraded the stock to “buy” with the target at Rs 1,083 per share, an upside of 23 percent from the current market price. It is of the view that the margin is likely to revive over the next few years and valuations are attractive adjusted for Beko. The brokerage firm has, however, cut EPS estimates by 13 percent, 9 percent and 6 percent over FY23-25, a CNBC-TV18 report said.

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Citi has a “buy” rating on the stock with the target at Rs 1,075. The brokerage believes that Q2 was a mixed bag with the room AC market share trends mixed. The company’s market share did improve to 24.5 percent in July against 24 percent at the end of June. Pressure on margin due to high-cost inventory should dissipate soon, it added.

Jefferies also has a “buy” call on the stock with the target cut to Rs 1,200 a share, an upside of 36 percent from the current market price. The brokerage firm is of the view that Q2 EBITDA was well below expectations as the margin is lower. QoQ cooling margin was lower by just 40 bps even with a 54 percent revenue decline, it said.

“Pricing is stable for now despite commodity price correction. We lower FY24-25 EPS estimates by 6-8 percent and believe the stock should give double-digit returns from current market price,” it said.

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