Voltas reports margin pressure amid delay in price hikeVOLTAS - 820 Change: -4.55 (-0.55 %)
News: Voltas reported a flattish revenue growth of ~1% YoY to Rs 2667 crore led by ~13% YoY growth in the revenue of UCP division. However, Sharp fall in EMPS segment revenue restricted the overall growth of the company. The EBITDA margin declined by 268 bps YoY to 9.8% tracking high raw material cost and delay in price hikes. PAT fell by 24% to Rs 183 mainly due to losses from JVs.
Views: We believe, lower than expected performance of Voltas in Q4FY22 is attributable to lower revenues from the EMPS segment and higher raw material costs. On the UCP front, we believe the revenue growth came largely through price hikes (YTD price hike of ~15%) whereas volumes offtake was impacted by higher base and extended winter. Voltas continues to be the market leader in the room AC segment with YTD (till January’22) market share of 25.4%. We believe, rising demand (due to intense heatwave across the country) and hybrid work model (i.e. change in lifestyle) would continue help drive Voltas’s UCP segment sales in FY23. However, we await management commentary on price hikes to mitigate higher raw material prices.