Release Date: October 30, 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 a significant milestone by selling 2 million air conditioners within just eight months of 2024, indicating strong market demand.
- The company reported a 33% increase in consolidated total income for the six months ending September 30, 2024, reaching INR7,726 crores.
- Profit before tax surged by 128% to INR657 crores, and net profit after tax grew significantly to INR468 crores, marking the highest half-yearly profit in the company's history.
- The Unitary Cooling Products Division outperformed the market with a 56% volume increase over the previous six months.
- Voltas Ltd (BOM:500575) maintained its leadership position with a 21% market share in the air conditioning segment as of September 2024.
Negative Points
- Persistent rains across the country during the quarter slowed industry progress, impacting the company's growth momentum.
- The commercial refrigeration industry faced headwinds due to a reversal in the capital expenditure cycle, leading to a decline in margins.
- Elevated commodity prices and a depreciating USD/INR exchange rate affected profitability.
- Challenges in the textile industry due to fluctuations in cotton and yarn exports led to reduced demand and margins for the agency business.
- The commercial refrigeration segment did not perform as expected, with a slowdown in capital investments affecting growth.
Q & A Highlights
Q: Can you provide insights into the secondary market performance for air conditioners during this quarter, especially considering the festive season?
A: Pradeep Bakshi, CEO and Managing Director, explained that the secondary market has been robust, with Voltas maintaining a 21% market share as of September. While the festive season typically doesn't significantly boost AC sales, other appliances like washing machines have performed well. Despite challenges from extended rains, the brand has continued to grow, indicating strong secondary sales.
Q: What is the expected timeline for Voltas Beko to achieve break-even, and what market share targets are you aiming for?
A: Pradeep Bakshi, CEO and Managing Director, stated that Voltas Beko is investing in brand building and aims to reach a 10% market share in washing machines and 7-8% in refrigerators. The company expects to achieve break-even in EBITDA by next year, with a turnover target of around INR 2,500-2,600 crores.
Q: How is the domestic Electro-Mechanical Projects and Services (EMPS) segment performing, and what are the expectations for the second half of the year?
A: Jitender Verma, CFO, noted that while the segment faced challenges due to heavy rains affecting project execution, the order book remains strong. The company is optimistic about recouping growth in the second half, supported by healthy order intake and selective project choices.
Q: What are the reasons for the margin pressure in the Unitary Cooling Products (UCP) segment, and how do you see margins evolving?
A: Jitender Verma, CFO, attributed margin pressure to factors like long-term incentive provisions for employees, commodity price increases, and investments in brand promotion. Despite these pressures, the focus remains on rupee profit rather than margin percentage, with expectations of stable margins as market conditions improve.
Q: Can you elaborate on the challenges faced by the commercial refrigeration segment and the outlook for this business?
A: Pradeep Bakshi, CEO and Managing Director, explained that the commercial refrigeration segment faced challenges due to a slowdown in capital expenditure and inventory liquidation pressures. However, the company expects improvement as market conditions stabilize and continues to hold a strong market position in this category.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
