Voltas (VOLT IN) – Q4FY26 Result Update – Recovery in margins likely to remain gradual – Downgrade to ‘HOLD’

UCP EBIT margins remained under pressure in FY26 (3.2% vs 8.4% in FY25) due to commodity inflation, currency depreciation and continued investments in branding and marketing. Management highlighted progressive margin improvement going ahead supported by calibrated price hikes, cost optimization initiatives, improved manufacturing utilization at Chennai and Pantnagar facilities, deeper localization and operating leverage. However, additional price hikes may be undertaken depending on further currency depreciation and commodity inflation trends, which may require double-digit price increases. while Secondary sales momentum improved sharply during Apr-May’26, aided by strong summer demand. company continues to maintain leadership in the RAC segment with a market share gap of ~5.1% versus the nearest cluster of four competitors, reflecting strong brand positioning and distribution strength. VOLT achieved RAC sales volume of ~2.25mn units in FY26. VOLT implemented ~5% price hikes for 3-star RACs and ~10% hikes for 5-star RACs, along with an additional ~2-3% increase to offset higher RM costs. Going ahead, it remains focused on profitable growth in MEP business through selective order booking across data centers, electronics manufacturing, industrial infrastructure, metro and tunnel projects, supported by disciplined execution and tighter risk management. Voltbek continued to strengthen its position in home appliances with YTD market share of 6.2% in refrigerators and 8.6% in washing machines, supported by premiumization, localization at Sanand facility, expanded channel reach and new product launches. We have downward revised our FY27E/FY28E earnings by 24%/13% factoring in continued margin pressure, higher promotional spends and slower ramp-up of the Chennai plant. We estimate FY26-28E revenue/EBITDA/PAT CAGR of 19.2%/44.7%/60.0%. we revise our SOTP-based TP to Rs1,308 (earlier Rs1,423), implying PE of 42x FY28E. Downgrade to ‘HOLD’ from ‘Accumulate’