Voltas Limited is an Indian multinational home appliances and consumer electronics company headquartered in Mumbai. It designs, develops, manufactures and sells products including air conditioners, air coolers, refrigerators, washing machines, dishwashers, microwaves, air purifiers, water dispensers. The company was incorporated on 6 September 1954 in Mumbai, as a collaboration between Tata Sons and Volkart Brothers.
Voltas is engaged in the business of air conditioning, refrigeration, electro – mechanical projects as an EPC contractor both in domestic and international geographies (Middle East and Singapore) and engineering product services for mining, water management and treatment, construction equipments and textile industry.
Voltas was created 6 decades ago when Tata Sons joined hands with a swiss company Volkart Brothers. Voltas is also one of the most reputed engineering solution providers specializing in project management. The company has 5,000+ Customer sites actively managed across India.
Quarterly Earnings Walkthrough
Voltas’ shares gained by 3% after the declaration of the earnings results. The company reported a net loss of Rs -110 crore for the December quarter. Overall, the trader’s sentiment have low hopes for earnings estimates for this financial year and the upcoming year, by considering lower margins for the company’s unitary cooling products’ (UCP) business. Voltas’ management made a statement that the UCP segment’s margin would be a high single-digit for the next 12-15 months. Voltas’ consolidated operating revenues have grown by 12% YoY to ₹2,006 crore.
The UCP business Earnings Before Interest and Tax (EBIT) margin was computed at 7.3%, shrinking by 281 basis points (bps) Year-on-Year (YoY) and 40 bps sequentially. The company said that the setbacks of carry forward of high-cost inventory places heavy pressure on the margin. Additionally, the competitive environment remains vicious.
Voltas is the market leader in the overall room air conditioner business with a market share of about 20%. However, this is lower than June ending market share of about 24%. The management has guided that it will have a prudent balance between its market share and margin.
UCP revenues have grown by 4% YoY. Voltas’ electro-mechanical projects and services segment’s revenues performed well with a 3% growth. The engineering products and services segment gave a 9.5% revenue growth.
LIC raises stake
Life Insurance Corporation of India (LIC) has increased its stake Voltas. LIC has notified the exchanges that it has raised its shareholding to 8.884% of the paid-up capital of Voltas. Previously, LIC held around 6.862% in the company.
As per the regulatory filing, LIC’s shareholding for Voltas has risen by 2.02% to 2,93,95,224 equity shares in Voltas from the earlier holding of 2,27,04,306 equity shares.
LIC has reported an increase of 2% in holding in Voltas during the period from August 10 to November 4, 2022. The transaction were performed as an open market purchase with an average cost of ₹948.31 per share in Voltas.
Voltas’ share price has made a full retracement to the 61.8% level and the price has taken strong support at that level. The price is under the 200-day moving average which makes it oversold and the fact that the price is near the 61.8% retracement level makes it a good long opportunity for the long-term. MFI is at 64 points because the stock jumped up in the past weeks, however it was under 30 for a considerable period. If the stock breaks below the Rs 782 level then traders may take short positions.
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