PremiumListen to this article |
Voltas Ltd impressed with the performance of unitary cooling products (UCP) segment in the quarter ended September. The UCP business made a good recovery, with a year-on-year volume growth of 24%. Room air conditioners (19%), commercial refrigeration products (31%), and air coolers (78%) contributed to this growth. The momentum impressed and can help the company partially tide over sales it lost during the peak summer season following the second wave of the pandemic.
Growth in the AC segment was led by sales of inverter air conditioners, which bodes well for the company’s margins. Voltas has held on to the top spot in the room air conditioner business with a market share of 25.9% year-to-date as of August, highlighted the company. Segment revenue rose 34% and was at ₹1,007 crores. Profit in the segment grew 19% year-on-year to ₹102 crore.
The electro-mechanical projects and services (projects) segment, however, reported soft performance, disappointing slightly. The segment revenue for the quarter was at ₹536 crore, lower than ₹744 crore in the year-ago period. The project business is seeing execution challenges with delays in the certification of projects. The carry-forward order book of the segment at ₹5,803 crore, though, led some optimism, with hope of a faster recovery. The company has remained selective and has been taking only good margin projects." Recovery in project business is likely in H2 FY22, both in terms of orders and execution" said analysts at HDFC Securities Ltd.
Meanwhile, rising commodity costs are adding to challenges for manufacturers such as Voltas. Though the company undertook some price hikes in October, it remains to be seen whether those were adequate. Trade channels have stocked up on inventory due to supply chain uncertainties, say analysts, and have also secured raw material. However, analysts said that, “margin may see near-term pressure".
Those at Yes Securities also feel that further market share gains will be difficult in the current hyper-competitive environment and needs to be monitored.
The company is doing well in its white-goods joint venture. Its Volt‐Bek JV has started gaining prominence in the market and localised production is expected to increase efficiency and bring down losses, said analysts at Yes Securities.
