Voltas share price falls 4% after net profit declines in Q1; Should you buy this Tata Group stock? Here's what brokerages recommend

Shares of Voltas fell around four per cent in early trade on Wednesday, a day after the Tata Group company reported 10.47% decline in consolidated net profit at Rs 109.62 crore in the quarter ended June '22. The Air conditioning and engineering services provider had posted a consolidated net profit of Rs 122.44 crore in the April-June quarter of the previous year.   

As the Tata Group company witnessed a decline in net profit, brokerage houses have maintained bearish stance on the counter.  

Global brokerage firm CLSA maintained a 'Sell' call on the counter, saying the company missed Q1FY23 estimates due to weak margins. Besides, EBITDA margin fell sharply on Year on Year and Quarter on Quarter, which reflects heightened competitive intensity & cost pressure, it said. However, revenue growth of 55% was in line with the brokerage's estimates. It pegged a taget price of Rs 930.  

Similarly, Morgan Stanley feels AC margins and project business disappointed. It maintained Overweight call with a target price of Rs 1168 per share.  

Macquarie too feels it was a disappointing quarter from Voltas. It retained underperform  rating for target price of Rs 939.  

ICICI Securities remained positive on the Tata Group stock due to strong brand equity of Voltas and established distribution network, but it said upside is capped at current valuations. It maintained a hold rating on Voltas with a target price of Rs 1,033.  

Voltas Q1 FY23 results

Earlier, Voltas' revenue from operations increased 55.05 per cent to Rs 2,768 crore during the period under review as against Rs 1,785.20 crore in the corresponding period of the previous fiscal. 

Its total expenses were at Rs 2,603.48 crore, up 56.69 per cent in first quarter of FY23, as against Rs 1,661.53 crore a year ago.  

Voltas' revenue from "unitary cooling products for comfort and commercial use" was up two-fold to Rs 2,162.20 crore as against Rs 963.11 crore. 

"On the back of the volume growth, gross segment revenue increased by 125 per cent," said Voltas, adding it "continues to be the market leader" in the segment with an existing market share of 24.1 per cent as of June 2022, said an earnings statement by the company.

Meanwhile, Shares of this Tata Group company has given a negative return of 5% in the past one year as on August 3.