Voltas Q4 Review - Facing Covid-19 Led Heat Wave: Prabhudas Lilladher

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Prabhudas Lilladher Report

We cut FY22/23 earnings by 13%/ 6% given -

1. dampened summer season sales due to Covid-19 and
2. commodity inflation-led margin pressure.

The company remained cautiously optimistic even as buoyant summer season demand has been impacted by second wave of Covid-19.

Unprecedented increase in commodity cost and ocean freights are likely to put pressure on margins despite two tranches of price hikes (5%/3%).

However, management remains confident of sustained market share gains in room air conditioner (1% annually; currently at 25.6%) while maintaining margins at minimum of 12%-12.5% led by -

1. wide distribution reach (19,000 touchpoints)
2. strong brand recall
3. supply chain efficiencies
4. calibrated price increases

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