Voltas stock price today up 5% on UBS upgrade; Whirlpool on a roll too

Voltas, Whirlpool of India stock price update: Shares of household appliances makers Voltas and Whirlpool surged up to 7 per cent on the BSE in Monday's intra-day trade on improved outlook.

Voltas stock price hit a new high at Rs 1,391, surging 7 per cent, in Monday's intra-day deals. Meanwhile, Whirlpool of India stock gained 5 per cent at Rs 1,521. Thus far in the month of April, these stocks have rallied 26 per cent and 25 per cent, respectively. In comparison, the S&P BSE Sensex has slipped 0.22 per cent so far in the current month.

UBS, meanwhile, has upgraded Voltas stock to buy from its earlier neutral rating with 12-month target price of Rs 1,800. Voltas, it said, has successfully reworked its supply chain in the RAC segment, further optimising its cost structure. Reducing costs to match Voltas will be difficult for recent new entrants, UBS believes, leading the industry into the early phases of consolidation and potentially market share gains for Voltas.

"We lift our FY24-26E EPS 4-31% and expect 20%/28% revenue/EBITDA CAGRs over FY23-26E. Relative to peers (Bluestar), we believe Voltas's valuation is undemanding despite improving prospects. Our Rs1,800 PT factors in potential market share gains and values the cooling segment at 55x 12-month fwd earnings (vs 35x earlier and 45x five-year average) and VoltBek JV at 4x P/sales (vs 3x earlier factoring in faster scale up)," the UBS report said.

About Voltas

Voltas is part of the Tata Group and is a premier air conditioning and engineering solutions provider and a projects specialist. Voltas also has Air Coolers, Air Purifiers, Water Dispensers, Water Coolers, Commercial Refrigeration & Air Conditioning products in its portfolio. It has also launched its range of Voltas Beko Home Appliances, through its JV in India, in equal partnership with Arcelik.

Summer has begun early in the South, which has resulted in strong demand for room air conditioner (RAC) products as cooling products demand is directly proportionate to heat waves.

There has been a pick-up post Holi in the West, while demand was subdued in the North but has picked up strongly due to increase in temperature. Also, localisation, and PLI have helped reduce the price of RACs, and with increasing financing options demand for inverter RAC has grown significantly, analysts at JM Financial Institutional Securities said in a sector report.

RAC prices have gone down in the last 1 year due to increase in localisation, PLI and favourable commodity prices, resulting in increasing affordability.

In RAC, industry is likely to grow on the back of affordability due to increase in localisation + PLI, low penetration, strong summer visibility and increase in financing options. Additionally the brokerage firm also expects industry to capture the export opportunity with improving localisation. In refrigerators and washing machines growth will be driven by increasing disposable incomes, ease of finance and shift towards premiumisation, it added.

In past two weeks, the stock price of Voltas gained 13 per cent after the company said it achieved the highest ever AC sales of over 2 million AC units in the financial year 2023-24 (FY24), becoming the first company in the domestic market to cross this mark.

"The company achieved over 2 million AC units during this fiscal 2023-24, the highest ever sale of ACs by any brand in a financial year in India, with a volume growth of 35 per cent," Voltas had said in a press release.

Voltas said the performance was attributed to a consistent demand for cooling products during the year, coupled with the company's strong offline and online distribution network, strongest brand equity, and innovative new launches. Voltas registered a significant growth in volume in other cooling products including air cooler and commercial refrigeration products.

Meanwhile, Voltas is likely to be included in the MSCI India Standard index in its May rebalancing. MSCI India Standard Index rebalancing announcement is scheduled on May 14, post the market hours. The price cut-off date for the rebalancing is any of the last 10 business days in the month of April, JM Financial Institutional Securities said.

Whirlpool stock price today

Meanwhile, shares of Whirlpool have bounced back 28 per cent from its 52-week low of Rs 1,186.85 touched on February 27. The company is primarily engaged in manufacturing and trading of Refrigerators, Washing Machines, Air Conditioners, Microwave Ovens and Small appliances and caters to both domestic and international markets.

On February 21, Whirlpool Mauritius Limited, the promoters, had sold 30.4 million equity shares of Whirlpool India via an on-market trade for $468 million to reduce debt. The transaction reduced the promoter/s ownership in Whirlpool India from 75 per cent to 51 per cent.

Whirlpool Corporation had said it continues to see India as a significant marketplace for growth and an integral part of the Company’s growth strategy. The Company remains committed to expand the business with new product launches and the recently acquired Elica India business.