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This air conditioning stock has zoomed 53% in one week on strong earnings

Johnson Controls-Hitachi rallied 13 per cent on the BSE in Wednesday's intra-day trade, extending its past four days gain

A good AC must cool a room quickly and without guzzling electricity

SI Reporter Mumbai

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Shares of Johnson Controls-Hitachi Air Conditioning India (JCH-IN) hit two-year high of Rs 1,872.90, as they rallied 13 per cent on the BSE in Wednesday’s intra-day trade, extending its past four days gain. This came after the company reported a net profit of Rs 48.1 crore in March quarter (Q4FY24). The household appliances firm had posted a net loss of Rs 1.06 crore in Q4FY23 and a loss of Rs 27.11 crore in December 2023 quarter (Q3FY24).

In the past one week, the stock price of JCH-IN has zoomed 53 per cent. It is trading at its highest level since May 2022. It had hit a record high of Rs 3,375 on March 4, 2020.

The company’s operational revenue grew 40.9 per cent year-on-year (YoY) to Rs 771.80 crore compared to Rs 547.62 crore in the year ago quarter. On sequential basis, revenue more-than-doubled or rose by 158 per cent from Rs 299.56 crore in Q3FY24.

Being an air conditioning product company, dependency of business is more seasonal in nature and major market demand is generated during the first and last quarter of the every financial year.

As India’s population continues to grow and its economy undergoes a transformation, the air conditioning industry has emerged as one of the high potential industries in the country. Changing lifestyles of Indian consumers have created a growing need for accessible and convenient products that improve comfort level of customers.

Rising GDP, growing per capita income, increased affordability due to easy availability of finance and growing e-commerce sector are some of the factors driving Indian air conditioning industry’s growth.

Industry is working on product innovation to meet the demand for energy saving products. Additionally, due to the highly competitive market environment, manufacturers are working to provide features such as seamless Wi-Fi connectivity and inverter type air conditioners at affordable rates, which are expected to drive growth in the Indian air conditioning market in the coming years, JCH-IN had said in its FY23 annual report.

Climate change has had an unrelenting effect on India. In last few years, in the northern regions of the country, temperatures passed the 50 degrees Celsius mark several times. Temperatures in the Indian summer over the last decade or so have repeatedly broken heat records, and there is no sign of respite from heat waves in the foreseeable future, making air conditioners an increasingly important fixture in Indian homes.

Increasing demand for air conditioners, along with a fairly low penetration rate, has left the Indian air conditioning market with plenty of room to grow. Air conditioning brands are focusing on expanding their delivery and service centers along with launching products with innovative features, including power-saving and auto-clean features. As per research reports, Indian air conditioning market is projected to grow at a (compound annual growth rate) CAGR of 10-12 per cent approximately in medium to long term, the company said.

Looking at the improvement in living standards of Indian consumers, recovery of organized commercial segment, push from Government for energy-efficient products and growth of hypermarkets, malls, hospitals etc., the light commercial air conditioners category is poised to grow. The company is expecting a further increase in demand and growth of the overall commercial chain, which in turn is expected to boost the sale of light commercial AC category in the coming period.

At 01:04 pm; JCH-IN was trading 11 per cent higher at Rs 1,836.50, as compared to 0.70 per cent decline in the S&P BSE Sensex at 74,644.

JCH-IN is engaged in the manufacturing and trading of Air conditioners under the brand name Hitachi. The company is also engaged in providing after sales services of the products so manufactured and sold by it.

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First Published: May 29 2024 | 1:32 PM IST

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