Voltas stock nears 52-week low: Time to buy, sell or hold?

Shares of Tata Group firm Voltas were trading near their 52-week low amid a highly volatile market today. Voltas stock fell to an intraday low of Rs 934.75, down 2.14 per cent against the previous close of Rs 955.20 on BSE.

The intraday low hit today is over 1 per cent higher than the 52-week low of Rs 923.50 touched on May 16, 2022.  Voltas stock is trading lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

Voltas share has lost 6.81 per cent in one year and fallen 21.24 per cent since the beginning of this year. The market cap of the firm fell to Rs 31,665 crore on BSE.

Total 0.18 lakh shares of the firm changed hands amounting to a turnover of Rs 1.66 crore on BSE.  

Shares of the Tata Group firm crashed 10 per cent on May 9 this year after Q4 earnings. Voltas declined 9.78 per cent intraday to Rs 1,045 against the previous close of Rs 1158.25 on BSE. Since then, they have traded below Rs 1,000 level.

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Here's a look at what experts and brokerages said about the outlook of the stock after the recent correction.

Manoj Dalmia, founder and director, Proficient Equities

"Voltas is currently trading at Rs 964 levels, the stock has reached a major support area of Rs 927, if this level is broken, the stock might face further selling pressure to Rs 750 (support) levels. Voltas belongs to a cyclical industry and is dependent on consumer spending for the business, with the current interest hike scenario the stock might suffer some setbacks in the near term. Investors can wait for some key support levels to appear and accumulate them at low prices."

Ravi Singhal, Vice Chairman, GCL Securities

"The stock appear weak from here as demand falls, implying that 10 per cent of the pain remains."

ICICI Securities is mildly bullish on the outlook for the stock. It has assigned a target of Rs 1,033 in a year.

"Voltas struggled to generate positive economic value during FY22 due to a decade-low RoE. The brokerage notes its EVA creation was impacted for first time in past decade. It also lost market share by 180bps in FY22 after gaining for a decade. Voltas Beko customer acceptance has increased and it reported 45% volume growth in FY22, to claim ~3 per cent market share in home appliances segment. It models Voltas to report revenue and PAT CAGRs of 15.3 per cent and 24.2 per cent over FY22-FY24E, driven by: (1) high single-digit price hikes, and (2) likely market share recovery. At current valuations, it believes stock price upside is capped. Hence, the brokerage maintains HOLD rating with a DCF-based target price of Rs1,033 (implied P/E 44x FY24E," said ICICI Securities in a report on June 13.

On June 16, HDFC Securites gave a target price of Rs 1150 for the stock.

"Voltas lost market share to LG and Samsung due to lower price gap and to Lloyd due to aggressive pricing. The brokerage believes the road is not an easy one for company in regaining its full share, although some recoup is expected owing to corrective price action and strong demand in the core market. Despite this blip in Q4 performance, the brokerage is confident on the company's execution capabilities (demonstrated in the past several years) while we will keep monitoring the market share status in the remaining season. Voltas is expected to sacrifice margin over growth; hence, it cuts EPS estimate by 4 per cent for FY23/FY24. We remain bullish on Voltas for being a market leader in the promising RAC category. It cuts UCP multiple to 45x against 50x earlier on FY24 EPS. It values the stock on SoTP (UCP/EMPS/EPS P/E at 45/9/15x and Volt-Beko P/S of 4x) on FY24 to derive a target price of Rs 1,150," the brokerage said.

The company's fourth-quarter earnings fell below expectations of the Dalal Street.

The air conditioning and engineering services company reported a 23.46 per cent fall in its net profit at Rs 182.71 crore for the fourth quarter ended March 2022 against a net profit of Rs 238.72 crore in the January-March quarter last fiscal.  

Total income came at Rs 2,703.78 crore in Q4, marginally up 0.76 per cent against Rs 2,683.24 crore in the corresponding period of the preceding fiscal. Total expenses rose 3.73 per cent at Rs 2,427.53 crore in the fourth quarter of FY'22 against Rs 2,340.22 crore in the year-ago period.