VOLTAS - Voltas Ltd. Share Price

Management Outlook:
Voltas anticipates sustained growth in its Unitary Cooling Products (UCP) segment, driven by strong summer demand, expanded product portfolios (especially inverter ACs), and enhanced distribution (Modern Trade, EBOs). The cooling products market is expected to benefit from favorable weather forecasts and consumer demand. For the Projects segment, the focus remains on executing the robust order book (Rs.8,054 crore) with a risk-mitigated approach, particularly in international markets (optimism for recovery in Qatar/Saudi projects). Voltas Beko aims for breakeven in FY25 and targets 10% market share via new launches and expanded retail/e-commerce channels.

Key Highlights:

1. UCP Segment:

   • Record 2 million AC units sold in FY24 (35% YoY growth); split ACs drove 50% volume growth.
   • Market share: 18.7% (room ACs); inverter ACs now 80% of sales.
   • Capex for Chennai/Waghodia plants to boost capacity (commercial production by FY25).
   • Margins impacted by commodity/currency pressures but offset by cost optimization.

2. Projects Segment:

   • Domestic projects grew 73% in FY24; order book at Rs.5,024 crore.
   • International losses due to Qatar provisions; recovery expected in FY25.

3. Voltas Beko:

   • 50%+ revenue/volume growth in FY24; strong traction in refrigerators, washing machines.
   • Expanding distribution (11,400+ touchpoints) and premium product launches.

4. Financials:

   • Consolidated revenue: Rs.12,734 crore (32% YoY); PAT: Rs.248 crore (82% YoY).
   • Dividend: 550% payout (72% of profits).
   • Cash reserves: Rs.2,835 crore.

Focus Areas: Market share expansion (ACs/appliances), margin improvement via cost control, and leveraging manufacturing scale.

Question 1:
"The first question was on the room AC business. If you could share your market share as of end of March '24, and also where do you think you can take this number to in the current year? We understand you have taken a lot of initiatives, especially on the modern trade side tie-ups with a lot of large national retail brands. So, if you could just help us, where do you see your market share in current year?"
Answer:
Voltas' room AC market share stood at 18.7% (YTD March 2024) based on syndicated data, though primary sales suggest ~20% share. Growth is driven by split ACs (95% of sales), modern trade, EBOs, and e-commerce. The company aims to sustain leadership through expanded distribution, competitive pricing, and inverter AC dominance (80% of portfolio).

Question 2:
"In the project business, is it possible you could share with us the provision that was booked in the fourth quarter? And whether all of this was specifically from the Qatar project? And if this is the last of the provision that we have seen over the last two years in Qatar and how are the projects in the other regions? And your outlook for FY "˜25 as far as the project business is concerned?"
Answer:
Q4 provisions were linked to delayed receivables in Qatar projects. Domestic projects grew 73% FY24, with a Rs.5,024 crore order book. International order book is Rs.3,030 crore (UAE/Saudi). Management expects no further provisions and improved international performance in FY25.

Question 3:
"On the UCP segment, historically when you were doing Rs. 4,000 crores revenue you were reporting 13%, 14%, 15% margin. This time around we are at a much lower margin number. How should we look at this margin going forward?"
Answer:
Margins are prioritized at high-single digits (9% in FY24) amid volume-driven growth (72% Q4 volume surge). Commodity inflation, forex pressures, and competitive pricing limited margin expansion. Focus remains on scaling revenue, cost efficiency, and leveraging new factories (Chennai/Waghodia) for long-term cost benefits.

Question 4:
"What portion of our total [projects] revenues is coming from the domestic side? And what kind of margin levels are we seeing?"
Answer:
Domestic projects contribute ~62% of the segment's order book (Rs.5,024 crore vs. international Rs.3,030 crore). Margins are guided at 4"“5%, with domestic projects yielding higher returns (40%+ ROCE). Growth is driven by MEP, water, and electrical projects, with cautious international bidding.

Question 5:
"In Beko, you had earlier guided for breakeven in FY "˜25. Where are we in that journey?"
Answer:
Voltbek (Beko JV) grew 50%+ in FY24, reaching Rs.1,500 crore revenue. Market share: refrigerators (5.3%), washing machines (8.5%), semi-automatic washing machines (15%). Breakeven (EBITDA level) is targeted for FY25, with 10% market share and premium product launches to drive profitability.

Question 6:
"Can you give the guidance on CAPEX for fiscal '25-'26?"
Answer:
FY25 CAPEX includes ~Rs.250 crore for Chennai plant expansion (total planned Rs.500 crore) and Rs.200"“250 crore for Waghodia facilities. These will boost AC, refrigeration, and commercial AC capacity to 3"“3.5 million units, catering to rising demand and regional markets.