Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Voltas Ltd (BOM:500575, Financial) achieved record-breaking top line growth with the sale of over 2 million ACs in FY24, indicating strong market demand.
- The company reported a consolidated total income for the year ended March 31, 2024, which was higher by 32% at INR12,725 crores compared to INR9,667 crores last year.
- Profit before tax increased by 58% to INR486 crores, and net profit after tax rose to INR248 crores from INR136 crores last year.
- The company maintained its leadership position in the air conditioner category with a YTD March market share of 18.7%.
- Voltas Ltd (BOM:500575) has expanded its product portfolio and distribution network, including exclusive brand outlets and experience zones, to strengthen market share.
Negative Points
- Despite strong revenue growth, the profit before tax for the quarter ended March 2024 decreased to INR174 crores from INR214 crores in the corresponding quarter last year.
- The segment results for the electromechanical projects and services reported a loss of INR108 crores due to delayed collection in certain overseas projects.
- Input price escalations and inability to pass on the same to customers have impacted the margins for the commercial air conditioning business.
- Commodity prices have started to accelerate upwards, and the USD-INR depreciation has been detrimental to the profitability of the business.
- The commercial refrigeration industry witnessed low traction throughout the year, leading to tepid growth in this category.
Q & A Highlights
Q: Can you share your market share as of the end of March '24 for the room AC business and your expectations for the current year?
A: Our market share as of the financial year-end is 18.7%. Historically, our market share has hovered around 20%. We aim to maintain and potentially grow this share through strategic initiatives across various channels, including modern trade, exclusive outlets, and e-commerce platforms.
Q: Could you provide details on the provisions booked in the project business for the fourth quarter, specifically from the Qatar project, and the outlook for FY25?
A: The provisions primarily stem from delayed collections in Qatar. We have proactively accounted for these delays, and we do not anticipate further significant provisions. Our domestic project business has shown strong growth, and we expect the international business to stabilize and deliver positive results in the next fiscal year.
Q: Will you continue to release volume numbers immediately after each quarter?
A: This was an extraordinary achievement, and we shared the volume numbers to highlight it. We will continue to inform stakeholders of significant milestones but may not release volume numbers every quarter.
Q: Despite strong volume growth, why haven't margins expanded significantly?
A: While we focus on volume and revenue growth, maintaining high single-digit margins is challenging when scaling from INR4,000 crores to INR13,000 crores. We aim to deliver consistent rupee profit growth, which adds to earnings per share and benefits shareholders.
Q: What are your CapEx plans for FY25 and FY26?
A: For FY25, we plan to spend around INR500 crores on our Chennai factory, with additional investments in our Waghodia plants for commercial AC and refrigeration. The total CapEx for FY25 will be around INR750 crores. We have not yet finalized the CapEx budget for FY26.
Q: Can you provide a breakdown of the UCP segment revenue for FY24?
A: In FY24, the UCP segment revenue included approximately INR1,000 crores from commercial refrigeration and INR1,300 crores from commercial air conditioning.
Q: What is the status of the VoltBek joint venture and its market share?
A: VoltBek achieved a revenue of INR1,585 crores in FY24, with significant growth in market share across various product categories. For example, our market share in semi-automatic washing machines is 15%, and in refrigerators, it is 5.3%. We aim to reach a 10% market share in the coming years.
Q: What are the margins for the RAC segment on a full-year basis for FY24?
A: For FY24, the RAC segment margins are around 9%. We aim to maintain high single-digit margins going forward.
Q: How is the domestic project business performing, and what is its contribution to total revenues?
A: The domestic project business has shown strong growth, contributing significantly to our total revenues. The order book for the domestic projects stands at INR5,024 crores, which is double that of the international business.
Q: What are your plans for expanding production capacity to meet rising demand?
A: We are investing in a new manufacturing plant in Chennai, which will add 1 million units to our production capacity by the end of this month. This will help us reach a total capacity of 2.3 to 2.5 million units. We are also augmenting our facilities in Waghodia and Sanand to meet the growing demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
