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According to insights from InCred Equities’ report on Voltas, despite anticipating robust revenue growth, the company grapples with significant margin pressures due to sustained losses in its Electro-Mechanical Projects (EMP) segment over recent quarters. Currently, InCred Equities holds a HOLD rating on the stock with a target price of Rs 1,115.

In terms of financial performance, Voltas recorded revenue of Rs 42 billion, marking a substantial 42% year-on-year increase and a notable 60% quarter-on-quarter surge.

This figure exceeded InCred Equities’ estimates by 20% and consensus estimates by 10%, primarily driven by a remarkable 44% year-on-year surge in revenue from the Unitary Cooling Products (UCP) segment, reaching Rs 30 billion.

However, the company sustained margin pressure, with Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) declining by 13% year-on-year to Rs 1.9 billion. This figure fell significantly short of both InCred Equities’ estimates by 25% and consensus estimates by 27%.

In the Projects business segment, the Domestic Projects business, encompassing Mechanical, Electrical, Plumbing, Water, and Solar segments, exhibited a robust 38% year-on-year growth propelled by a healthy order book.

Conversely, the International project business faced challenges, particularly in Qatar, due to unreasonable delays in the release of due receivables and prolongation of execution timelines. Voltas reassessed its exposure to these delays, resulting in a loss of Rs 1.08 billion.

Additionally, raw material costs surged by 46% year-on-year to Rs 33.7 billion, while other expenses rose by 74% year-on-year to Rs 4.4 billion. Consequently, total expenditure increased by 47% year-on-year during the quarter.