AC makers, power stocks rise up to 6% on demand surge amid severe heatwave

Analyst said that demand and consumption of electricity may further rise due to more intense heatwaves, with more frequent use of air conditioners, air coolers, and other appliances.

AC, power stocks rally: Shares of cooling products manufacturers and power generation and distribution companies gained in trade today as an intensifying heat wave, especially in northern states, led to higher use of cooling devices. The Nifty Consumer Durables index rose more than 2.5 per cent around 1 PM. 

Individually, shares of air conditioner makers such as Amber Enterprises gained a little over 5 per cent to trade at ₹8,166, followed by Blue Star, which was also up 5 per cent at ₹1,906. Other counters, including Dixon Technologies, Voltas, LG Electronics India, PG Electroplast, Whirlpool, and Crompton Greaves, rose in the range of 3 to 4 per cent each to ₹11,179, ₹1,520, ₹1,628, ₹564, ₹990, and ₹258, respectively. 

 

Separately, power stocks also gained in trade after India's peak power demand hit an all-time high of 256.11 GW on Saturday due to an intensifying heat wave. The heatwave is likely to lift electricity demand, with increase in usages for cooling products. 

Among power sector stocks, Suzlon Energy, NLC India, JSW Energy, and Torrent Power gained more than 5 per cent each to trade a ₹56.870, ₹319, ₹574, and 1,795 respectively. Other stocks like Tata Power, Reliance Power, Inox Wind, NTC Green, Thermax, SJVN, CESC, and Adani Power were up in the range of 3 to 4 per cent.  CATCH STOCK MARKET UPDATES TODAY LIVE 

Power demand at all-time high

According to the Power Ministry data, peak power demand set a new high of 256.11 GW at 1538 hrs on Saturday. The peak power demand is close to the Ministry's estimate of 270 GW for this summer season, as mercury levels have begun to rise. 

Temperatures in several regions have been significantly above normal - by 5 degrees Celsius or more - indicating a developing heat stress scenario across parts of the country, according to the India Meteorological Department (IMD). 

Analysts said that demand and consumption of electricity may further rise due to more intense heatwaves, with more frequent use of air conditioners, air coolers, and other appliances by domestic and commercial consumers to beat rising mercury levels in the country. 

According to the Indian Meteorological Department (IMD), there will be heatwave conditions over major parts of northwest, central and eastern India till this week.

Seasonal demand strong

According to Deven Choksey, MD of DRChoksey Finserv, summer is usually the peak time for white goods, especially air conditioners. In some parts of the country, the marriage season also boosts demand for white goods, so higher sales during the quarter are normal. 

Choksey said that the demand is also supported by higher disposable income. Tax benefits and lower direct taxes have left people with more money to spend, which is increasing consumption of products like cooling appliances and other white goods. 

"Overall, the trend in the industry is expected to remain similar to last year, without major changes in growth," he said. 

He, however, said that there are some challenges as input costs may rise due to higher metal prices like copper, and logistics costs are also increasing because of geopolitical disruptions.  

Choksey said that he sees no immediate buying opportunity in the white goods as the Street has already factored in the expectations. "These factors could affect margins. At the moment, the market has already priced in most of these expectations, so there is no strong immediate opportunity for buying stocks in this sector," he said. 

LG, Amber Enterprises, Blue Start top picks

Sunny Agrawal, head of fundamental research at SBI Securities, said that there is an expectation that there will be a strong demand trend for cooling products like AC, air coolers, and others.  

"In case there is no seasonal disruption during the peak months of May and June, then industry can witness healthy double digit volume growth during FY27. Only challenge can be impact on production due to disruption in gas supply," he said. 

Sunny said that the top picks to ride the summer portfolio are LG Electronics, Amber Enterprises, and Blue Star. 

Kunal Kamble, senior technical research analyst at Bonanza, said that Blue Star is his top pick from the pack. Technically, he said that Blue Star is actively showing a recovery and is reclaiming key moving averages, while maintaining a healthy RSI of 61, suggesting it has the requisite momentum to break its current resistance. 

 

"Furthermore, recent institutional data highlights rising confidence with increased insurance firm holdings, making it the most resilient pick for short to medium-term appreciation," the analyst said. 

 

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