❄️ At a Glance
Voltas Ltd — the Tata group’s cooling arm — has had a scorcher of a 5-year journey. Market share in ACs? Check. Revenue growth? Double check. But profits? That’s where the fan stops spinning. With margins thinner than a summer handkerchief and new competition turning up the heat, the question is: Can Voltas deliver both volume and value?
🧊 Segment Snapshot: What Does Voltas Really Do?
🧵 1. Unitary Cooling Products (UCP)
- Core biz: Room ACs, air coolers, purifiers, water dispensers
- FY25 market share:
- Room ACs: 21.2%
- Window ACs: 36% (dominant!)
- Retail infra: 30,000+ touchpoints, 330+ exclusive stores
🔌 2. EMPS (Electro-Mechanical Projects & Services)
- Major EPC contractor in India + Middle East
- Projects: HVAC for metros, airports, commercial infra
🔩 3. Engineering Products & Services
- Niche B2B play: mining, textile, water solutions
✅ The brand recall? Strong.
✅ Distribution network? Unmatched.
❌ Profit consistency? Hmm…
🧾 5-Year Financial Performance
| Year | Revenue (₹ Cr) | EBITDA (₹ Cr) | OPM % | PAT (₹ Cr) | EPS (₹) | ROCE | ROE |
|---|---|---|---|---|---|---|---|
| FY21 | 7,556 | 580 | 8% | 529 | 15.9 | 15% | 15% |
| FY22 | 7,934 | 572 | 7% | 506 | 15.2 | 13% | 13% |
| FY23 | 9,499 | 454 | 5% | 136 | 4.1 | 10% | 4% |
| FY24 | 12,481 | 336 | 3% | 248 | 7.6 | 9% | 7% |
| FY25 | 15,413 | 990 | 6% | 834 | 25.4 | 18% | 14% |
📈 Revenue CAGR (5Y): 15%
📉 PAT CAGR (5Y): 9%
💥 EPS finally jumped in FY25 — but took 4 years of pain
🧊 What Went Wrong? And What Went Right?
🔻 Margin Meltdown (2022–2024)
- High input costs: copper, plastic, freight
- Losses in EMPS division, delays in Middle East projects
- Price wars with Lloyd, Daikin, LG, Blue Star
🔼 FY25: The Great Recovery Begins
- Margins back to 6%
- PAT tripled YoY
- Better pricing + cost efficiencies
📦 Quarterly Trends: Margin Ice-Cream Melting or Refreezing?
| Quarter | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM % | EPS (₹) |
|---|---|---|---|---|
| Q1 FY25 | 4,921 | 335 | 8% | 10.1 |
| Q2 FY25 | 2,619 | 133 | 5% | 4.05 |
| Q3 FY25 | 3,105 | 131 | 5% | 3.99 |
| Q4 FY25 | 4,768 | 236 | 6% | 7.28 |
📈 Growth is consistent, but…
📉 Margins still range-bound at 5–8%
Not ideal for a B2C leader.
🏦 Balance Sheet & Cash Flows
| Metric | FY25 Value |
|---|---|
| Total Debt | ₹892 Cr |
| Cash Equivalents | ₹1,600 Cr |
| Net Cash Position | ✅ ₹700+ Cr net cash |
| Reserves | ₹6,480 Cr |
| ROCE | 18% |
| ROE | 14% |
📉 Operating Cash Flow in FY25: –₹224 Cr
🧯 Negative due to working capital + capex buildup
💡 Investments continue in capacity and retail infra
📉 Shareholding Drama: The Great FII Exit
| Category | Mar 2022 | Mar 2025 |
|---|---|---|
| Promoter | 30.30% | 30.30% |
| FIIs | 24.67% | 21.95% |
| DIIs | 29.44% | 32.99% |
| Public | 15.38% | 14.53% |
📤 FIIs have trimmed stake by 3%
📥 DIIs added ~3.5%
Retail public? Mostly unchanged
📈 Valuation Snapshot
| Metric | Value |
|---|---|
| CMP | ₹1,294 |
| EPS (TTM) | ₹25.43 |
| P/E | 51x 😅 |
| P/BV | 6.57x |
| EV/EBITDA | ~40x |
✅ High brand, stable business
❌ Way too expensive if FY25 earnings aren’t sustained
🧮 EduInvesting Fair Value Range
📘 Method 1: P/E Normalization
- FY25 EPS = ₹25.4
- Assume sustainable P/E = 30x (due to Tata brand, leadership, stable B2C + EPC)
👉 Fair Value = ₹25.4 × 30 = ₹762
📊 Method 2: EV/EBITDA
- FY25 EBITDA = ₹990 Cr
- Assume 20x EV/EBITDA (QSRs trade higher, but consumer durables ~18–22x)
👉 EV = ₹990 × 20 = ₹19,800 Cr
Add ₹1,600 Cr cash = ₹21,400 Cr
Equity Value = ₹21,400 Cr ÷ 33 Cr shares = ₹648
🎯 EduInvesting FV Range = ₹650 – ₹760
🚩 CMP of ₹1,294 = ~70–100% above FV
🙃 The stock has priced in perfection — and maybe a central AC in every Indian home
📊 Stock Returns Recap
| Period | CAGR |
|---|---|
| 10Y | 14% |
| 5Y | 19% |
| 3Y | 11% |
| 1Y | -14% |
📉 FY25 rebound didn’t reflect in price yet — stock is still 14% down YoY
⚖️ TL;DR – Cool Products, Hot Valuation
✅ Market leader in ACs
✅ Strong Tata brand, huge network
✅ Recovery visible in margins + PAT
❌ Still trades at 50x P/E
❌ Free cash flow volatile
❌ EPC drag not fully gone
Unless margins consistently hit 8–10% and cash flows stabilize, this isn’t a chill buy at current levels.
🧊 EduInvesting Verdict
Voltas isn’t broken — just overstretched on valuation.
FY25 looks promising, but investors need to watch if this recovery is just a summer fling or long-term compounding. Wait for the heat to settle before chasing.
✍️ Written by Prashant | 📅 18 June 2025
Tags: Voltas, Tata AC stock, Voltas FY25 Results, Voltas Fair Value, Consumer Durables, Voltas vs Blue Star, EduInvesting
