**[investwise]** BOA ML-Airconditioners Emerge A New Growth Segment, with 35% yoy jump in Q1 [1 Attachment]

 

[Attachment(s) from Maverick included below]

Hitachi , Whirlpool and Voltas could re-rate to 16XFY12e Earnings, leaving upside potential of atleast 30 per cent from current levels Why the re-rating: (1)  rising outlook of residential AC market; and (2) cyclical upturn in project business.3. Q1 Volume growth in Room ACs rises 29 per cent for Voltas, 30 per cent for Whirlpool and 35 per cent for Hitachi. 4. EBIT margins rise between 80 and 100 per cent for Voltas, Whirlpool and Hitachi. Room air-conditioner segment growing 30%+ and has long way to go Voltas, as the second-largest room AC company in India, with about 18% share, is a key beneficiary of the extremely strong demand growth being seen in room air-conditioners.  In fact, AC is the fastest-growing consumer goods in India and  likely to remain so, owing to (1) rising affluence along with climate change; and (2)  fall in ownership cost owing to rising energy efficiency.  Voltas expects room AC  revenue, contributing to 25% of its revenue, to grow 30-35% in FY11e. So strong was the demand for Room ACs in Q1 FY11 that Voltas had trouble maintaining supplies to Dealers, and there were periods of total stock outs at the Retail end. Room AC driving growth Voltas is a key beneficiary of rising demand and profitability in the consumer durable industry, as room air-conditioning is the fastest-growing segment. Key growth drivers of AC demand are following. 1. Extremely low penetration level of less than 1% for room AC, compared to around a 10% penetration rate of two wheelers carrying a similar price tag, shows significant upside. 2. Climate change, leading to extreme and protracted summers, is acting as a catalyst for demand growth. 3. Rising income levels along with increased affordability owing to the increase in energy efficiency of air-conditioners is boosting demand. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.   Nothing in this article is, or should be construed as, investment advice.

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