Shares of Voltas Limited, a leading company in the engineering solutions and air conditioning industry and a member of the Tata Group, witnessed a sharp decline of nearly 12% on January 30, 2025. The company’s quarterly earnings report, which showed a return to profitability but fell short of market expectations, was the catalyst for this decline.
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Q3 Earnings Overview
Voltas announced a consolidated net profit of ₹132.13 crore in its most recent financial report for the third quarter ended December 31, 2024. This amount is much better than the loss of ₹30.41 crore in the same quarter last year. The results fell short of experts' estimates, who had predicted a profit of around ₹158.21 crore despite this encouraging profit. Moreover, the quarter's revenue grew 18.3% to ₹3,105.11 crore from ₹2,625.72 crore last year.
Market Reaction
On the Bombay Stock Exchange (BSE), Voltas shares fell sharply following the announcement, hitting an intraday low of Rs 1,298.55, slightly below the lower circuit limit of Rs 1,254.90. The stock declined nearly 11.63% during morning trade, while the BSE Sensex rose marginally by 0.47% during the same period. Currently, the market value of Voltas is around Rs 43,165.57 crore.
Operational Performance Analysis
Despite the impressive sales growth, operational indicators showed several shortcomings, which disappointed investors. The company's Q3 EBITDA margin came in at 6.4%, well below the 7.1% forecast by analysts. Although this margin increase from just 1.1% in the same quarter last year represents progress, it also draws attention to persistent issues with operational efficiency and cost control.
Segment Performance Insights
A market share of 20.5% and volume growth of 42% in the nine months reflected the strong expansion of the unitary cooling goods category, which includes air conditioners. However, a comparison of the segment's results with the earlier period revealed a decline. The electro-mechanical projects and services market also saw growth, although profitability was problematic.
Analyst Recommendations
Analysts are divided on the future success of Voltas shares in light of these findings. Goldman Sachs lowered its recommendation to 'sell', reducing its target price from ₹1,500 to ₹1,400 per share, while Macquarie kept its rating at 'neutral' and raised the target price to ₹1,595 per share. In view of the recent performance, other brokerages such as Morgan Stanley and ICICI Securities have also revised their target price and ratings.
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