Japan-based brokerage Nomura has put out a ‘Buy’ rating on the stock with a target price of Rs 1,083 per piece, an upside of over 24 percent over the current levels of the shares. Citing high demand and low penetration of air conditioners in the country, the brokerage expects the AC industry to witness strong growth. The stock closed at Rs 873.80 a piece on the NSE on March 15.
“Over the longer term, we expect AC industry growth visibility to remain high due to low penetration levels and latent demand (high average temperatures). Competitive intensity remains unsustainable and operating leverage/price hikes will likely be margin tailwinds for FY24F,” Nomura said in its research note.
Voltas management is expecting to see its operating margins improve in the future. While Voltas has noted earnings before interests and taxes (EBIT) margins in the 2-5 percent range in the past few quarters, and the industry’s EBIT as a whole to remain in single digits, it is expecting to hit around 9 percent EBIT margins.
“Further improvement will likely be led by industry consolidation and PLI incentives over a period,” Voltas management stated.
Apart from Nomura, New York-based brokerage Jefferies also sees a potential upside for Voltas. The firm gave a ‘Buy’ rating with a target price of Rs 1,050 per share, with the firm expecting demand to heighten due to higher temperatures during heat waves. “We see strong EPS growth and double digit stock returns in FY24,” it said.
However, financial firms Prabhudas Lilladher and Emkay Global have given far more conservative targets though they expect Voltas stock to move upwards. At the same time, Goldman Sachs has put out a ‘Sell’ rating with a target price of Rs 840, citing that even during the hottest of months the market is only able to grow 6-8 percent.
Shares of Voltas were trading 0.49 percent higher at Rs 878.05 apiece on BSE at 12:11 pm.
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