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On Friday, UBS analyst Akshay Gattani adjusted the price target for Voltas Ltd. (NSE:VOLT:IN) to INR1,725 from the previous INR1,940, while retaining a Buy rating on the stock. The revision reflects a more conservative valuation approach in light of recent market developments.
Gattani’s report highlighted Voltas’ impressive performance, noting a sharp sequential improvement in margins and a 17% growth in the Unitary Cooling Products (UCP) segment’s topline on the back of a strong 51% base. The company also achieved a year-over-year market share improvement of 30 basis points.
The price target revision takes into account a 20% decline in Voltas’ stock price since March 20, which is attributed to subdued secondary sales impacted by unseasonal rains. Gattani suggests that while the primary demand for Room Air Conditioners (RAC) might be weak in the first quarter of FY26, Voltas’ strengths in product cost and distribution network are expected to support market share gains in the longer term.
The report also mentions the VoltBek Joint Venture, which has been gaining traction, though its turnaround is still a critical factor to monitor. In anticipation of near-term challenges in the cooling products’ secondary sales, UBS has reduced its FY26 and FY27 earnings estimates for Voltas by 4% each.
The new price target of INR1,725 is based on a Sum of the Parts (SoTP) valuation, with the UCP segment now being valued at 45 times the 12-month forward Price to Earnings (PE), down from 50 times, to account for increased competitive intensity in the market. Despite the price target reduction, the firm’s outlook on Voltas remains positive, as reflected in the maintained Buy rating.
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