May27 , 2022

Tata Group Stock Tumbles 10% After Q4 Earnings. What Brokerages Say



Shares of Voltas Ltd tumbled nearly 10% to 1,045 apiece in Friday’s early deals on the BSE after the air conditioning and engineering services company reported a 23% year-on-year (YoY) decline in its consolidated net profit at 182.7 crore in the fourth quarter ended March 2022.

The Tata group firm’s total income stood at 2,703.7 crore during the period under review, marginally up 0.7% against 2,683 crore in the same quarter last year. 

“Voltas has managed to grow despite a high base. Its market share has been stagnant around 25-26% indicating intense competition in RAC segment. Although we structurally remain positive on the stock, rich valuations and challenges in further RAC share gains might limit near-term upside from current levels. We will revisit our estimates post the earnings call. We currently have reduce rating on the stock with target price of 1,190,” said Yes Securities.

Voltas said that the extended winter coupled with the spread of the third wave of mutant (Omicron) during January/February 2022 affected the trade and consumer sentiments, resulting in lower primary offtake of cooling products by channel partners.

However, the hot weather turned the market outlook in March 2022 resulting in partial sales recovery for the quarter, the company added.

Those at ICICI Securities believe, lower than expected performance of Voltas in Q4FY22 is attributable to lower revenues from the EMPS segment and delay in price hikes. 

“We believe, rising demand (due to intense heatwave) and hybrid work model (i.e. change in lifestyle) would continue help drive Voltas’s UCP segment sales in FY23. However, we await management commentary on price hikes to mitigate higher raw material prices,” ICICI Securities added.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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