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Informist, Thursday, May. 14, 2026

 

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--Voltas: Margin dilution in FY26 owing to erratic summer in first half
--CONTEXT: Comments by Voltas mgmt in post-earnings call with analysts
--Voltas: Seek to improve margins closer to FY25 levels
--Voltas: Seeing benefits of cost reduction programme started 9 mos ago
--Voltas:Some cost-cutting benefits offset by rupee fall, commodity inflation
--Voltas: Took price hike in April on rupee devaluation
--Voltas: See price trend on upward trajectory, GST cut helped soften hit
--Voltas: See high-priced inventory being absorbed by channel partners
--Voltas: Saw demand in Apr-May buoyant, expect June quarter to be good
--Voltas: See input costs moving up in double digits, will have to pass on
--Voltas: Channel inventory for room ACs perhaps closer to 30 days currently
 

 

By Sunil Raghu and Ashutosh Pati

 

AHMEDABAD/MUMBAI – Voltas Ltd. Thursday affirmed that it might have to pass on the double-digit rise in input costs due to the disruption caused by the ongoing military conflict in West Asia. This is despite the company having undertaken multiple price hikes over the last two quarters.

 

"...The next round of increase will depend on how the overall prices stabilise, actually. So it depends on how the war situation goes and how the dollar reacts, the rupee dollar goes. So, we are watching it almost on a weekly basis. So at this point in time, it looks, as I said, double-digit numbers," the company's management said in a conference call with analysts and investors after the announcement of the company's March quarter and FY26 earnings. 

 

Over last two quarters, Voltas had raised prices of its air-conditioners to offset a rise in input costs due to factors such as higher commodity cost and currency fluctuations, as well as the implementation of star-rating norms by the Bureau of Energy Efficiency from Jan. 1. It effected a 5% price hike for the 3-star category room air-conditioners and 10% for the 5-star category ACs. It also undertook a 2-3% increase on account of a copper price hike, and implemented a price hike in April to offset the impact of currency fluctuation.

 

What really helped soften the impact of continued price rise was a cut in goods and services tax by the government. The company's management said that Voltas had started working on an active cost reduction programme nine months ago and had started seeing some benefits of late. However, these were offset by inflation, inflationary pressures, and currency impact.

 

Talking of prices ahead, the management said it sees the price trajectory moving upwards. Other than rising costs, the management expects reduction in channel ineventory due to buoyant demand for air-conditioners in the months of March, April and May, courtesy rising mercury levels. Overall, the company expects the ongoing quarter to be a good one in terms of demand. The demand is such that channel partners have begun exhausting current inventory and are expected to start building new inventory. The management said channel inventory has dropped dramatically and is less than 45 days now, "probably closer to 30 days as we see it."

 

 

The management said all initiatives, including passing on cost hikes, are towards improving the company's top line and margin profile. The company had seen margin dilution for FY26 owing to an erratic summer in the first half of the year. It is now targeting to take back margins closer to FY25 levels. "How many quarters it takes, it depends on how the overall market... Essentially, in this kind of thing, the demand plays a very big role...Now, if the war continues and if there is an inflationary trend and the affordability of this product, there is a contraction in demand."
 
For the March quarter, Voltas reported a consolidated bottom line of INR 1.16 billion, down nearly 52% on year from INR 2.41 billion reported in the year-ago quarter. Its top line for the quarter rose over 2.5% on year to INR 48.88 billion.
 
On Thursday, shares of the company closed nearly 2.8% higher at INR 1,293.50 on the National Stock Exchange. The company detailed its March quarter earnings post market hours.  End

 

Edited by Avishek Dutta

 

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