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Below is quote on Voltas Q2FY22 Result Update - First cut By Mr. Himanshu Nayyar, Lead Analyst – Institutional Equities, Yes Securities

Voltas 2QFY22 Results First cut – UCP continues to perform in difficult environment

Result summary – Consolidated revenue grew 4.7%; UCP and Engineering products and services business delivered growth of 34% each. EMPS business revenue saw decline of 28% yoy.

Margins – Gross margin expanded 51bps yoy to 26.6% while on sequential basis it contracted 132bps yoy. EBITDA margin expanded by 127bps yoy on higher gross margins and costs reduction initiatives.

UCP: Revenue grew 34.3% yoy. The Unitary Cooling Products business made good recovery and achieved overall volume growth of 24% contributed by growth of 19% in Room Air conditioners (AC), 31% in Commercial Refrigeration Products and 78% in Air Coolers. Growth in AC was led by sale in Inverter category AC. Voltas continues to be the market leader and has sustained its No.1 position in Room Air conditioner business with its market share at 25.9% as on August 2021. EBIT margin stood at 10.1% contraction of 132bps yoy.

EMPS Revenue declined 27.9% yoy on lower execution. EBIT margin in EMPS stood at 2.1% vs 0.1%. The company has been cautious in executing projects as in past they have to content with costs and time over runs

EPS: Revenue grew 34% in line with estimates with EBIT margin of 31.3%.

Other Highlights: 1) Losses from JV has increased to Rs189mn indicating higher losses from its Volt-Bek JV. Losses from JV in Q1 stood at Rs306mn 

Our view -  Despite challenging conditions Voltas has managed to protect its leadership position in RAC, while commercial air-conditioning and air-coolers are seeing increased traction. The stock has already seen a significant re-rating. We continue our positive stance on the stock and will revisit our estimates post the earnings call.

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