Mar 9, 2023

IMD forecast a hot summer with "above normal" temperatures in most parts of the northeast, east, northwest, and central India. 09 Mar 2023, 10:49 AM IST 09 Mar 2023, 10:49 AM IST WhatsApp ADVERTISEMENT Makers of "summer-centric" products like fans, air conditioners, refrigerators, air coolers, pipes (agri) and pumps are all set to extract profit this year given the expectation of a hot summer, according to Jefferies.The India Meteorological Department has forecast a hot summer during the March–May period, with "above normal" temperatures in most parts of northeast, east, and central India, including some parts of north-west India.T... Makers of "summer-centric" products like fans, air conditioners, refrigerators, air coolers, pipes (agri) and pumps are all set to extract profit this year given the expectation of a hot summer, according to Jefferies. The India Meteorological Department has forecast a hot summer during the March–May period, with "above normal" temperatures in most parts of northeast, east, and central India, including some parts of north-west India. Therefore, companies such as Crompton Greaves Consumer Electricals Ltd., the leader in fans and resi pumps; Havells India Ltd., the maker of Lloyd ACs; V-Guard Industries Ltd., a stabiliser and fan manufacturer; Finolex Industries Ltd., the leader in agri-pipes; Amber Enterprises India Ltd. with its ACs; and Supreme Industries Ltd. with a diversified mix, will be the key beneficiaries, the brokerage said. Jefferies expects an average hike of 14% year-on-year in sales growth and a 110 basis point rise quarter-on-quarter in operating profit margin for these companies in the fourth quarter of this year. "Crompton is the market leader in fans with more than 28% shareholding and residential pumps with above 25% share," Jefferies said, while Havells India has been posting good sales growth in its Lloyd with 18% of its mix over the last four to five quarters, alluding to volume market share gains. Whirlpool India has a stronger franchise in refrigerators and washing machines, with 60–65% of its mix, than in ACs, the brokerage said. Air coolers are also sold by Crompton, Havells, and V-Guard. Jefferies predicts that in the fourth quarter of FY23, the average sales will grow by 10% year-over-year and the operating profit margin will grow by 70 basis points quarter-over-quarter. "Amber Industries has a 70% market share in contract manufacturing of air conditioners in India and can be viewed as a demand aggregator for the under-penetrated AC industry," it said. Finolex Industries is the market leader in agri-pipes with 70% of its pipes mix, while Supreme Industries has a diversified product mix with pipes accounting for 65% of its sales, Jefferies said. Buy or Hold Buy: Amber Enterprises India, Crompton Greaves Consumer Electricals, Dixon Technologies (India), Finolex Cables, Finolex Industries, Graphite India, HEG, Kajaria Ceramics, Polycab India, Supreme Industries, UPL, V-Guard Industries Hold: ADVERTISEMENT