AC sales to report robust growth
News: According to The Economic Times, consumer electronics and appliances manufacturer (CEAMA) estimates ~9 mn units of AC sales in FY23, which is ~30% growth over pre-Covid level sales. Monthly sales for April 2022 at 1.75 mn units was up ~35% over pre-Covid level sales.
Views: We believe strong AC sales is on the back of rising demand (due to intense heatwave across the country) and hybrid work model (i.e. change in lifestyle). Normalised inventory level and anticipation of zero effect of fourth Covid wave on business have fuelled the dealer confidence to build up the inventory. We believe, strong revenue growth is also supported by price hikes (~15% price hikes Since January 2022) taken by the companies to offset higher raw material prices. We believe, the summer sales are in line with our expectations, however supply disruptions on import components remains a headwind. We believe, under our coverage Voltas, Havells and Amber Enterprises to be beneficiaries of strong summer sales of RAC.