UBS Lifts Voltas To Buy; Doubles Target Price On Likely Market Share Gain

UBS says Voltas's valuation relative to peers (Blue Star) is undemanding despite improving prospects
UBS Lifts Voltas To Buy; Doubles Target Price On Likely Market Share Gain

Global brokerage UBS Securities upgraded Voltas Ltd. to Buy from Neutral and doubled its target price on the stock to 1,800 rupees from 885 rupees per share amid growth prospects.

“We believe Voltas has successfully reworked its supply chain in the RAC (room air-conditioner) segment, further optimizing its cost structure,” UBS said in an investor note dated 19 April.

The brokerage said reducing costs to match Voltas will be difficult for recent new entrants, leading the industry into the early phases of consolidation and potentially market share gains for Voltas.

It believes Voltas will surprise on market share in the RAC segment, reaching 23% in FY26E versus consensus view of 19.5%.

UBS said the VoltBek joint venture (Voltas white goods JV with Beko) should also continue to gain market share, and boost profitability by breaking even in FY26E. It projected an incremental revenue of 100 billion rupees (60% of FY27E revenue) in the consumer electronics segment by FY27.

“The stock has performed well YTD (year-to-date), but we see further re-rating potential as share gains start to materialize,” analysts Akshay Gattani and Amit Mahawar wrote in the note.

The brokerage raised its FY24-FY26E EPS by 4%-31% and expects a 20%/28% revenue/EBITDA CAGRs over FY23-FY26.

“Relative to peers (Blue Star Ltd.), we believe Voltas's valuation is undemanding despite improving prospects,” it said.

At 10:00 am, Voltas was trading 3.6% higher at 1,347.80 rupees on the National Stock Exchange.

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