An employee inserts a screw on an air conditioner cabinet. (Photographer: Udit Kulshrestha/Bloomberg) 

Brokerages Slash Voltas’ Price Targets On Slowing Demand, Rising Competition

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Brokerages have turned cautious on Voltas Ltd., with most of them cutting their target prices on the stock citing concerns regarding increased competition and weather uncertainties hitting demand, amid weaker-than-expected March quarter earnings.

The air conditioner maker reported 3.13 percent dip in profits for January-March at Rs 194.19 crore against Bloomberg consensus estimates of Rs 198.5 crore. Revenues for the company remained flat at Rs 2,021 crore for the reported quarter.

The company's stock, which is currently trading at Rs 583.20, has fallen 10 percent so far this year, compared to a 4 percent gain for the benchmark S&P BSE Sensex during the same period.

Here's what brokerages had to say about Voltas:

Deutsche Bank

  • Maintain ‘Sell’, target price unchanged at Rs 470.
  • Demand recovery in next 45 days of summer as expected by management unlikely, as around 82 percent of first quarter sales are in April May.

Edelweiss

  • Maintain ‘Buy’, cut target price to Rs 685 from Rs 745.
  • Poor season plays spoilsport while growth profile intact.
  • Inverter ACs gaining momentum; maintaining the balance act.
  • Roll-out of white goods range and branding/marketing remain vital for Voltas.

Goldman Sachs

  • Maintain ‘Buy’, cut target price to Rs 700 from Rs 760.
  • Below expectation performance but just a hiatus in a positive long-term structural trend.
  • See the risk-reward as favourable as it trades at discount to peers.
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