Air conditioner prices up 3-5%; PL decodes Q1 impact on Voltas, Blue Star & Havells India

Prabhudas Lilladher in its latest note said note there has been a price hike by air conditioner makers ranging from 3 per cent to 5 per cent, across brands. Its March 2024 channel check earlier indicated that major brands such as Mitsubishi, Lloyd, and Voltas Ltd implemented a price increase of 2-3 per cent, with other brands following the suit. 

The recent developments may positively influence AC makers in the June quarter. PL said AC inventory levels are currently low, driven by the severe summer season. Some channels operate on an order basis with inventory holding for 15-30 days, adjusting based on demand, it noted.

PL said AC demand at secondary level has increased by more than 50 per cent compared to off season. Highest demand was experienced at the end of May. In few states channels were unable to fulfill orders due to less supply, PL said. Currently, summer demand is at their peak and expectations are it may normalise after the onset of rain. 

In the case of Havells India, Lloyd, where over 80 per cent revenue from RAC, the price hikes has been to the tune of 3 per cent across geography. Praveen Sahay, Research Analyst at Prabhudas Lilladher said volume growth for Havells is expected to be healthy even after higher base for the quarter. The company that reported 19.1 per cent revenue CAGR over Q1FY20-24 may see revenue rising 120 per cent YoY in Q1FY24, PL said.

Voltas too reported a price hike by 3-5 per cent. Sahay of PL said Voltas seems to be gaining market share. The volume growth in Q1FY25 is expected to be robust, considering 9.5 per cent revenue CAGR over Q1FY20-24. He sees sales growth of 16.3 per cent YoY growth in Q1FY24 in UCP segment.

Blue Star is expected to deliver strong volume growth on a moderate base. It reported 17.2 per cent revenue CAGR over Q1FY20-24 and is seen 6.3 per cent YoY growth in Q1FY24 in UP segment.