Voltas Q4 Review - Ongoing Lockdowns Overshadow The Strong Operating Performance: Motilal Oswal

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Motilal Oswal Report

Voltas Ltd.’s Q4 FY21 earnings were 28% better than our expectation, led by better than expected margins in electro-mechanical projects and unitary cooling products (UCP) segment.

The company continues to be No. one player in room air conditioners, with a market share of 25.6%.

Favorable product mix aided UCP margin as the share of inverter ACs now constitutes 77% of split AC sales (64% in Q4 FY20).

Current valuations adequately factors in franchise strength of the UCP business.

We note that a large part of the margin surprise is due to cut in ad spends and low-cost inventory that was procured last year (~200 basis point advantage).

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