The air conditioner (AC) and cooler market has also become hot due to the rising temperature across the country. The demand for these home appliances, which provide relief to people in the heat of summer, has increased by 24 per cent in just one month, but stock market analysts are divided on whether this trend can continue.
According to The Economic Times, volumes declined in January and February due to increase in prices, but improved in March. Because, the summer weather got better than expected. This March was the hottest in more than 120 years. Skymet said, we need to deal with the scorching heat.
The industry also expects strong demand growth for these products after two years with the Covid-free summer. Amid this backdrop, stocks of major AC companies have risen 5-24 per cent since the beginning of March, with Johnson Controls - Hitachi Air Conditioning India leading the pack. It was well behind Voltas, which added 23 per cent. Whirlpool, Amber Enterprises, Blue Star and Voltas gained 4-8 per cent during the same period, as against Nifty 50 rising 6 per cent.
According to market experts one can hedge against the very high heat by buying some air conditioner stocks and this is a no brainer, as we are witnessing heat waves across the country and whenever the temperature rises, the sales of ACs and The sale of air cooler also increases. Voltas and Symphony are two of his top picks from this field.
On the other hand, however, some analysts say that investors are better off booking profits in these companies after such sharp growth and amid the risk of commodity inflation. After March when the heatwave started, AC stocks started moving. Investors got 20-25 per cent returns. Also, how much higher returns they can give, cannot be said as most of the positives are already built into the price.
Analysts said smart investors should book profits instead of investing in these stocks after the rally. Whirlpool continues to lead the way with an average gain of 44 per cent and a target price of Rs 2,407. The stock was earlier trading at Rs 1,675 on BSE. For Hitachi and Amber Enterprises, the average target price suggests a return of 17 and 7 percent, respectively. On the other hand, Blue Star is likely to decline by 40 per cent. Shows trendline data, with an average target price of Rs 700. Symphony (2 percent upside scope) and Voltas (2 percent downside scope) are expected.
