Voltas: Cooling efforts

Shares of air-condition maker Voltas rose 2% to Rs 642.40 on NSE following the impressive fiscal first quarter to June 30 earnings performance.
The Tata Group company outperformed peers in a challenging quarter marred by lockdowns. Though the impact on revenues and profits was visible, the positive was its ability to expand its market leadership in the air conditioner business.

On Friday, Voltas reported 51% drop in consolidated net profit to Rs 81.77 crore during April-June quarter, impacted by COVID-19 pandemic. The company had posted consolidated net profit of Rs 166.32 crore in the same quarter last fiscal.
Total income of the company during the quarter under review stood at Rs 1,364.34 crore, down 49% from Rs 2,697.27 crore in the year-ago period.
Earnings before interest, tax, depreciation and amortisation (EBITDA) was at Rs 135.67 crore, down 50% from Rs 270.47 crore a year ago.

Voltas is expected to recoup sales with recovery in demand.
Voltas’ year-to-date market share stood at 26.2% at the end of June quarter (24.2% in previous quarter). Within segments, Voltas also gained share in inverter ACs. The unitary cooling products segment (primarily AC’s) saw revenues decline almost 60% on-year as sales were impacted by lower demand.
UPC business showed more than 200 bps market share and margin expansion.

As AC demand shifts to the next season, which is the summer of 2021, Voltas remains the pick for playing the AC penetration theme. Apart from its leadership and brand, it also has a strong debt-free balance sheet with cash of Rs19 billion.

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