Shares of consumer durable makers, especially those manufacturing air conditioners, rallied to fresh life-time highs on Wednesday reports Yoosef KP in Mumbai. Analysts said the heat wave condition in various parts of the country, coupled with anticipation of a deficit monsoon, which might extend the summer spell, has helped the investor sentiment in these companies. While shares of Blue Star, Whirlpool and Voltas climbed to life-time high on Wednesday, those of IFB Industries hit their highest level in the last 52 weeks during the day’s trade.
The Blue star stock – the best performer in the BSE Consumer Durable Index – ended the session at R652, up 5.8%. This helped the index gain 1.3% – its biggest single-day gain in two weeks – to 14,892.25. Experts observe that sales of air conditioners are largely a function of a harsh and long summer, with a major chunk of the manufacturers’ full-year sales and consequently profits being reported in the summer months of March to June.
Blue Star’s first quarter net profit of R72.4 crore in FY16, for instance, accounted for 67% of its full-year net profit of R108.4 crore. The June quarter, similarly, accounted for 34% and 39%, respectively, for IFB Industries’ and Whirlpool India’s net profit in FY16. Lower interest rates, thanks to 175 bps of repo rate cut over the last two years, will further help air conditioner sales this summer, said experts.