Household appliances corporations shares engaged in the air-conditioner (AC) business were in focus on prospects of upgrading in volume as India Meteorological Department (IMD) issued the first heat wave alert of 2023.

Johnson Controls-Hitachi Air Conditioning India flowed 7% to Rs 1,286, IFB Industries rallied 5%, Voltas and Blue Star gained 4% each, and Symphony was up 3% on the BSE in Wednesday’s intra-day trade. The S&P BSE Sensex was down 0.82% at 60,174 at 10:22 am.

The fast-moving electric goods (FMEG) firms observed weak rural demand amid high inflations and slow record build-up of winter-associated home appliances. However, analysts believe the EBITDA sideline will see further retrieval from Q4 onwards, reinforced by improved working leverage and enabling inflationary burden on raw material prices.

Recently, IMD dispensed the first heat wave alert of 2023. Usually, temperatures upsurge in March, but in February, the trends are viewing. Dealers are underlining that lower commodity prices are unpassed on in pricing. This points to enrich volume and margin outlook for Voltas (28% 1-yr deficit to Nifty) ahead, an analyst at Jefferies said in a stock apprise. The brokerage firm trusts FY24E should see both AC and Engg sections of Voltas being in a sugary spot.

AC inventory at the dealer level is contented, despite weak 3Q demand, where the industry saw hardly 2% YoY growth. Given this, 4QFY23E-1QFY24E should see a 250 bps+ margin increase QoQ if average summer temperatures succeed. Market share being constant at 22.5% vs 22.8% QoQ in Q3 is a comfort.