Voltas, Crompton, Blue Star rally up to 5% on late monsoon; check top picks

Shares of air-conditioner makers jumped up to 5 per cent on Wednesday as a delayed monsoon and persistent heatwave boosted demand expectations.  

Notably, India is currently experiencing a rainfall deficit as the southwest monsoon has slowed. Monsoon reaches Kerala on June 1, but it was delayed by three days this year. According to the India Meteorological Department (IMD) data, the country has recorded 34.3 mm of rainfall between June 4 and June 14. This is well below the normal rain of 47.7 mm in the period.  

Individually, shares of Blue Star and Crompton Greaves were leading the gains, up 4.7 per cent and 4.2 per cent to trade at ₹1,698 and ₹275.60, respectively, on the National Stock Exchange (NSE) as of 1 PM. 

 

Voltas shares were up 3.1 per cent at ₹1,370, while Havells India and LG Electronics shares traded higher by 1.3 per cent each at ₹1,196 and ₹1,590. 

  The India Meteorological Department’s (IMD) second stage long range forecast (LRF) pared the volume of monsoon rainfall to 90 per cent (+/-4 per cent) of Long Period Average (LPA) from 92 per cent (+/- 5 per cent) indicated in the 1st LRF, both of which fall under “below-normal” rainfall classification.  READ | P&G India sees rural consumption growth soften amid inflation pressures 

Analysts said that India's air-conditioner industry is highly dependent on weather patterns. Compared to many consumer-facing sectors, cooling products have emerged as one of the better-performing discretionary categories this quarter. While FMCG demand remains mixed and consumer durables growth has been moderate, the RAC (Room Air Conditioner) segment continues to benefit from weather-led demand and India's still-low AC penetration levels.  Rajesh Palviya of Axis Securities said that delayed rains and prolonged warm conditions have raised expectations for extended sales of air conditioners and cooling products. This has led to a fresh buying interest in shares of companies like Voltas, Blue Star and others.

 

"Rainfall has been below expectations so far. As a result, investors are factoring in strong order inflows for companies operating in this segment. In addition, the industry continues to face some supply constraints, which could support pricing power and help manufacturers maintain healthy margins," he said. 

Rajesh said that he remains positive on Voltas and Blue Star from the space. "We have a constructive long-term view on Voltas, while the near-term outlook also looks attractive. Blue Star is another stock we are bullish on, and it could show the levels of ₹1,900." 

Analysts said that while demand may moderate after the monsoon, the sector's medium-term outlook remains positive. India's AC penetration remains below many emerging markets, and rising temperatures, urbanisation and income growth could support industry growth for several years. 

 

Ponmudi R, CEO, Enrich Money, said the market is increasingly valuing air-conditioner manufacturers not merely as seasonal plays but as long-term beneficiaries of rising urbanisation, increasing disposable incomes and structural climate changes that are driving higher cooling requirements across India.

 

Among listed players, Ponmudi said that he prefers Blue Star and Voltas as the two companies remain direct beneficiaries of the long-term expansion in India's cooling market.

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