AC stocks sizzle as temperatures soar

By: | Updated: March 31, 2017 3:29 AM

Shares of consumer durables makers, especially air conditioners and air coolers, continued to rally on Thursday. The stocks rose sharply led by Mirc Electronics, owner of the Onida brand, which ended 5.33% higher at `3.83 per share.

The India Meteorological Department has forecasted heat waves in several parts of country. (Reuters)

Shares of consumer durables makers, especially air conditioners and air coolers, continued to rally on Thursday. The stocks rose sharply led by Mirc Electronics, owner of the Onida brand, which ended 5.33% higher at `3.83 per share. Hitachi was one of the biggest gainers in the consumer durables index. The Hitachi stock surged 3.34% on Thursday closing the session at `1,796.95 on BSE. The intra-day high for the stock was `1,830.90.

Apart from Hitachi, Blue Star, Whirlpool of India and Voltas were among the gainers. The price of these stocks rose between 0.1 to 5.5%.

“Sales of air-conditioners have picked up sharply in the last fortnight on the back of soaring temperatures. Our dealer checks suggest that LG’s aggressive inverter AC pricing has not meaningfully dented the regular split AC market. We have revised our FY17E-19E EPS higher by 1-5% to factor better AC pricing environment in margins,” Jefferies wrote in a report.

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For instance, Voltas’ market share rise in ACs began steadily from 17% in 3QFY12 to 22% in 1QFY15. Despite rising competitive intensity Voltas has maintained its market leadership position with margins in 12.5-14% band. This also includes one bad season when AC market rose at less than 5% in FY16 as temperatures were benign.

The India Meteorological Department has forecasted heat waves in Rajasthan, Uttar Pradesh, Chandigarh, Haryana, Delhi, Gujarat, Madhya Pradesh and Chhattisgarh, according to the weather forecaster’s website.

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