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Published: October 30, 2024
Updated: October 30, 2024

Voltas Stock Surges 100% in One Year: Can This Tata Giant Keep Up the Momentum Post-Q2?

Impressive Market Performance and Q2 Highlights

Voltas Ltd has seen a stellar performance over the past year, with its share price doubling. In Q2 of FY25, Voltas reported a solid 14.2% increase in revenue, driven by strong sales in its Unitary Cooling Products (UCP) segment. This growth also led to a significant expansion in its EBITDA margin, up by 313 basis points, thanks to a favorable product mix, cost-control measures, and positive margins in the EMPS segment.

Analysts’ Sentiment: Holding Steady with Optimism

After a substantial rally, analysts remain neutral-to-positive on Voltas, cautiously optimistic about its long-term prospects. Nirmal Bang highlighted Voltas's impressive year-to-date growth of 74% in CY2024, setting a "HOLD" rating with a revised target of Rs 1,740. This target represents a valuation at a blended PE multiple of 49 times on the projected EPS for September 2026, about 31.5% lower than its five-year average PE.

Summer Demand and Festive Season Boost AC Segment

The summer season brought strong growth for Voltas’s AC segment, which is expected to continue performing well through the ongoing festive period, according to Motilal Oswal Financial Services Ltd (MOFSL). While heavy rains slowed project execution in the EMPS segment, Voltas anticipates a return to normal operations as weather conditions stabilize.

Long-Term Potential for Volt-Beko Home Appliances

Nuvama highlighted Voltas's market strength, noting a significant gain in market share with a 21% exit rate in Q2FY25. Volt-Beko, Voltas’s home appliances venture, showcased robust volume growth of 54% year-over-year, reinforcing its position as an industry leader. Although Nuvama adjusted EPS estimates downwards by 5-7% for FY25-27 to account for Q2 margin performance, it has raised its target price to Rs 2,140, valuing the stock at 50 times Dec-26E EPS.

Growth Expectations for FY25 and Beyond

MOFSL reiterated a “BUY” rating for Voltas, setting a target price of Rs 2,070, considering the strong performance across segments. This target factors in 55 times Sep-26E EPS for UCP, 40 times for PES and EMPS, and Rs 38 per share for Voltbek. The one-year 100% rally in Voltas shares reflects strong market confidence and robust growth, especially in its UCP and Volt-Beko segments. Accordingly, while analysts encourage a watchful approach, Voltas remains a promising Tata Group stock with potential for sustained growth, especially through the festive season and beyond.