The revised target implies only a marginal upside from Friday’s closing level.
According to the brokerage, Voltas has rallied over 13% year-to-date and is currently trading at 42x FY28E price-to-earnings, which already factors in earnings growth from a likely normal summer season.The stock is also trading at an 8% premium to LG Electronics India, a valuation BofA finds difficult to justify.
The brokerage believes LG Electronics India remains a superior franchise, citing higher return on equity (nearly 2x that of Voltas) and stronger export exposure (exports account for about 10% of LGEL’s FY27 sales). As a result, BofA prefers LGEL over Voltas.
The Street is currently building in a normal summer, with expectations of 19% year-on-year revenue growth in FY27 and margin expansion of over 167 basis points.
However, BofA estimates that Voltas would need to implement 7-9% price hikes across products to offset rising cost pressures.
While positive pricing commentary from peers offers some comfort, the brokerage said that its global commodities team has revised its copper and aluminium forecasts and now expects 3% inflation (versus current market prices) in 2026.
As a result, BofA anticipates an incremental 100 basis points of cost pressure and has cut its earnings estimates for FY26-FY28 by 4-7%.Volta’s market share
Voltas’ market share has declined to 18% in Q3FY26 from 24% in Q1FY23.
The brokerage also flagged two medium-term risks:
Continued losses at Voltas Beko: The joint venture has been a drag on earnings, reporting losses of over ₹1 billion annually since FY22 (equivalent to 17% of FY26E PBT).
Profit-after-tax breakeven is now expected only beyond FY28.
Indigenisation push: Over the past decade, the government has raised import duties every 2-3 years, though there has been no revision since FY22.
A potential 2.5% duty hike could impact Voltas’ margins by around 60 basis points.
Data centre opportunity remains long-term positive
BofA expects data centre capital expenditure of $70 billion (₹6.3 lakh crore) by FY30, with HVAC-Voltas’ total addressable market-accounting for about 13% ($9.1 billion or ₹0.8 lakh crore).
However, 70-80% of the capacity addition is expected post-FY28. At a 10% market share, the brokerage estimates data centres could contribute an additional 180-200 basis points to annual earnings growth through FY30.
