Detailed Narrative
Strong FY25 Performance Driven by UCP and Projects Turnaround
Voltas reported a robust FY25, with consolidated total income growing 24% to INR15,737 crores and net profit surging to INR834 crores, marking its highest-ever profit. This performance was primarily fueled by the Unitary Cooling Product (UCP) business, which saw a 30% revenue increase to INR10,614 crores and a 36% volume growth. The Electrical-Mechanical Projects and Services segment also made a significant turnaround, moving from a loss of INR328 crores in the previous year to a positive segment result of INR169 crores in FY25.
UCP Segment Maintains Leadership Amidst Competition
The UCP segment maintained its market leadership with almost 19% market share as of March 2025. Growth was driven by strong demand for premium and energy-efficient products, as well as larger capacity industrial coolers. Despite a temporary dip in market share in April due to delayed summer and unseasonal rains, management expects to recover in the largest Q1 (April-June) period. The company acknowledges intense competition with over 60-65 brands in the market, making it challenging to sustain very high market share levels.
Projects Business Focus on Execution and Collections
The Projects business recorded a 13% revenue increase to INR4,157 crores in FY25 and achieved a positive segment result of INR169 crores. The carry-forward order book for the segment stands at over INR6,500 crores as of March 31, 2025. However, the segment faced challenges in collections from certain domestic projects and made a provisioning of approximately INR40 crores for delayed payments in international projects, which management is actively working to recover.
Mixed Performance in Other Segments and Voltas Beko
The Engineering Products and Services segment experienced headwinds, with FY25 revenue declining to INR569 crores due to macroeconomic factors and geo-political issues impacting the textile machinery division. Voltas Beko, the home appliances brand, demonstrated strong volume growth of 57% in FY25, achieving 8.7% market share in washing machines and 5.3% in refrigerators, despite overall single-digit industry growth in these categories. The company aims to localize refrigerator manufacturing and improve profitability through efficiencies.
Operational Efficiencies and Other Income Contributions
The company's profitability was also supported by operational efficiencies, value engineering initiatives, and cost control measures. Other income saw a jump due to interest and mark-to-market income on investments, as well as accrued PLI-linked incentives. The Chennai room air conditioner factory's ramp-up is on track, helping to meet increased demand and balance the supply chain, particularly in Southern and Western markets, and is expected to receive state benefits over 15 years.
Custom Duty Demand and Market Outlook
Voltas received a custom duty demand of approximately INR25 crores in April 2025 related to copper tubes, which is currently under evaluation. Despite global economic uncertainties, management remains optimistic about India's strong economic fundamentals and expects double-digit growth for the AC industry, although specific percentage guidance (15-20%) is difficult to provide due to seasonal dependencies.