VOLTAS - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.1
| Stock Code | VOLTAS | Market Cap | 47,330 Cr. | Current Price | 1,430 ₹ | High / Low | 1,582 ₹ |
| Stock P/E | 96.4 | Book Value | 243 ₹ | Dividend Yield | 0.49 % | ROCE | 12.7 % |
| ROE | 9.79 % | Face Value | 1.00 ₹ | DMA 50 | 1,408 ₹ | DMA 200 | 1,399 ₹ |
| Chg in FII Hold | 0.03 % | Chg in DII Hold | 0.54 % | PAT Qtr | 59.7 Cr. | PAT Prev Qtr | 7.33 Cr. |
| RSI | 52.2 | MACD | 29.1 | Volume | 13,88,284 | Avg Vol 1Wk | 13,18,514 |
| Low price | 1,186 ₹ | High price | 1,582 ₹ | PEG Ratio | 10.3 | Debt to equity | 0.17 |
| 52w Index | 61.7 % | Qtr Profit Var | -44.9 % | EPS | 14.5 ₹ | Industry PE | 46.7 |
📊 Financials: VOLTAS shows moderate efficiency with ROCE at 12.7% and ROE at 9.79%. Debt-to-equity ratio is low (0.17), ensuring financial stability. EPS of ₹14.5 supports profitability, but quarterly PAT dropped sharply (-44.9%), highlighting earnings volatility. Cash flows remain inconsistent due to fluctuating profits.
💹 Valuation: Current P/E of 96.4 is extremely high compared to industry average (46.7), suggesting steep overvaluation. PEG ratio of 10.3 signals poor alignment between growth and valuation. P/B ratio (~5.9) is stretched relative to book value. Dividend yield of 0.49% provides minimal income support.
🏢 Business Model & Advantage: VOLTAS operates in consumer durables (air conditioning and engineering services), benefiting from strong brand equity and distribution networks. Competitive advantage lies in brand recognition and diversified product portfolio, though profitability remains inconsistent.
📈 Entry Zone: Attractive accumulation near ₹1,350–₹1,400 (close to DMA 200 support). Current price (₹1,430) is slightly above fair entry, with resistance at ₹1,580.
⏳ Long-Term Holding: Suitable for 2–3 year horizon if earnings stabilize. Partial profit booking advised near ₹1,550–₹1,580 resistance to manage valuation risks.
Positive
- Low debt-to-equity (0.17)
- Strong brand presence in consumer durables
- EPS of ₹14.5 supports profitability
- DII holdings increased (+0.54%)
Limitation
- High P/E (96.4 vs industry 46.7)
- PEG ratio of 10.3 indicates expensive growth
- Quarterly PAT decline (-44.9%)
- Dividend yield of only 0.49%
Company Negative News
- Profitability remains inconsistent despite brand strength
- Valuation premium raises sustainability concerns
Company Positive News
- Strong rebound in PAT compared to prior weak quarter
- Institutional support with FII (+0.03%) and DII (+0.54%) inflows
Industry
- Industry P/E at 46.7 reflects moderate sector valuation
- Consumer durables sector supported by demand cycles but challenged by margin pressures
Conclusion
VOLTAS is financially stable with strong brand equity but suffers from steep valuations and earnings volatility. Entry is safer near ₹1,350–₹1,400, with profit booking advised near ₹1,550–₹1,580. Long-term holding is viable only if profitability stabilizes and valuations normalize.