The financial year 2024 has been quite an eventful year starting with supply chain disruptions due to the Russia-Ukraine and Israel-Hamas conflicts and the Red Sea crisis. These disruptions had led to a sharp jump in shipping rates with crude oil prices soaring post the Iran-Israel war leading to a surge in inflation numbers. Despite many unfavourable situations, the world avoided a recession and the banking system proved largely resilient with global growth pretty buoyant despite the above-mentioned adverse circumstances.
From a domestic perspective, despite many headwinds, the India growth story remains positive with major economic indicators like the PMI, services index, GST, and direct tax collections reporting robust business activity. The country’s growth has been driven by the government’s Make in India initiative and significant infrastructure spending leading to a robust GDP growth. Another positive was the foreign exchange reserves which rose for the third straight week to touch USD 648.700 billion for the week ending 17 May 2024 as per data shared by the Reserve Bank of India.
The headlines of May 22, Reserve Bank of India approving the transfer of Rs 210874 crores as surplus dividend to the Central Government for the accounting year 2023-24 was received very well by stock market players with the BSE Sensex rising nearly 1200 points on that day.
The higher-than-budgeted RBI surplus transfer would help to boost the government’s resources allowing for enhanced expenditures and a sharper fiscal consolidation. Increasing the funds available for capital expenditure would also boost the quality of the fiscal deficit.
All these positive factors helped the Sensex climb the wall of General election outcome worry last week to cross the highest peak level of the 75000 BSE index on the back of positive quarterly financial results and strong fundamental purchases by the market men.
After many months of negative monthly performance, the Nifty FMCG chart clearly showed a positive trend for May 2024 on the back of a pickup in rural demand. Resurgence in India’s FMCG stocks portends a revival in India’s Rural Consumption story. Consumer durable stocks like Voltas and Blue Star are expected to post fantastic quarterly numbers seeing a bumper demand for their products due to the harsh summer across the country.
Voltas has seen record-breaking top-line growth with sales of over 2 million air-conditioners for the financial year 2024, indicating a strong market demand for the company’s products registering a 72% quarterly growth and an annual growth of 35% in terms of volume. This has been achieved on the back of strong brand positioning, distribution reach, and leverage on the supply chain. This has helped Voltas retain its leadership position for the year with an 18.7% market share. The company reported consolidated total income for the year ended 31 March 2024, at Rs 12734 crores, which is 32% higher compared to Rs 9667 crores of the last fiscal. Profit before tax was higher by 58% at Rs 486 crores as compared to Rs 307 crores of last year.
The profit after tax was higher at Rs 248 crores as compared to Rs 136 crores as of last fiscal. The corporate balance sheet continues to remain healthy with cash and cash equivalent at Rs 2835 crores as of 31 March 2024. Voltas is in line with its target of capital expenditure plans on stream at its factories in Chennai and Waghodia which are gearing up to get ready for the festive sale season during the current year. The Chennai factory which will go live next month will be the country’s largest manufacturing plant adding another 1 million air-conditioner units over the next 2 -3 months. The other segments like the electro-mechanical project and services along with the engineering products and services divisions have posted high healthy order books and excellent profit margins.
The future guidance for Voltas is quite strong with domestic
business expected to do very well in the next 2 to 3 years and report excellent financial results. Analysts, FIIs, and fund managers are bullish on the Voltas scrip and expect the stock to double in the next two years.