A hotter summer is likely in India this year with severe heat enveloping Northwest and South India. As summer sets in, the chase for cooling solutions to beat the heat becomes a necessity. No wonder, this desperate search for solutions is going to lead to a brisk business for summer product makers this year.
During the summer months-April to June-temperatures usually hover from 40°C – 45°C. However, this year, the temperatures are slated to rise above than the usual in Delhi, Uttar Pradesh, Madhya Pradesh, Andhra Pradesh and Telangana. Consequently, people in these states are expected to flock to electronics shops to buy air conditioners, coolers and fans to beat the heat.
According to industry experts, the stock of companies associated with summer products namely, consumer appliances, ice cream and aerated drinks makers, and tour and travel will benefit as demand is likely to surge.
"A harsh summer can be positive for some consumer companies, which produce products to beat the heat," Abneesh Roy, associate director, Edelweiss Securities told Business Standard(BS).
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Many consumer appliance companies such as Blue Star, Voltas, LG, Symphony and Usha International foresee to clock exponential growth in the coming months.
"Fan sales last year was nearly flat, with two-three per cent volume growth because of a short and mild summer. But with rural demand picking up, I expect better sales in 2016 as temperatures are predicted to be above average," Rohit Mathur, vice-president, fans business, Usha International said in a statement released to BS.
While sales from North India forms a major part of the market share for these companies, South India also gives a reason to smile to these product makers. Andhra Pradesh and Telangana have already seen one round of heat wave in past month where temperatures rose to 42°-43°C.
“We have seen good growth over past 2 months in Southern region. About 30% & above growth has been registered,” says Vijay Babu- Business Head ( AC)-LG India.
In wake of this weather phenomenon, The Economic Times (ET) has come out with its report on major players where it foresee that stock of these companies will move up.
While Blue Star is likely to register 25% YoY growth, ET assumes 10% revenue growth for the AC business of Voltas. The trned will turn out positive for Vadilal as well which stands next to Amul in terms of volumes in India. Moreover, as summer peaks, travel companies will benefit from the burgeoning demand in outbound travel.
Commenting on Cox & Kings stock,Joyjit Sinha, analyst, Karvy Stock Broking said, “The stock is trading at 7 times FY18E EPS and we recommend a buy with a target price of Rs 202.”
Inputs from Business Standard and The Economic Times
Image Credit: universityexpress.co.in
