Voltas maintained industry leading room air conditioner (RAC) margins and still gained market share (23.9 percent February YTD versus 22.1 percent YoY).
Voltas shares gained 5 percent on June 7 on strong hope that scorching summer due to delayed monsoon will boost earnings in Q1FY20.
While maintaining buy call on the stock with a target price at Rs 675 (revised from Rs 658), HDFC Securities said it increased EPS estimates by 2 percent, driven by higher growth in unitary cooling products (UCP) led by scorching summer and market share gains (higher offtake in fixed speed).
In an otherwise dull FY19, Voltas maintained industry leading room air conditioner (RAC) margins and still gained market share (23.9 percent February YTD versus 22.1 percent YoY).
"This validates the company's focus on the mass-premium segment and deep distribution, unlike premium hunting peers. We expect Voltas' UCP segment to grow by 23 percent in FY20 given (a) healthy offtake in summer, (b) Lower channel inventory, (c) Market share gains and (d) Favorable base," the brokerage said.
"Low RAC penetration, higher incomes and rising cultural affinity for cooling in India drives our long-term structural stance," he added.
India Meteorological Department (IMD), on June 5, said monsoon would likely get further delayed and may hit the Kerala coast on June 8. Normally, the monsoon reaches Delhi by June 29.
Most parts of India has been seeing severe heat wave with the temperature hovering at around 45-50 degrees Celsius.
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