Amber, Crompton, Voltas: Jefferies' Top Picks Set To See Big Summer Boost

With a sweltering summer predicted, Jefferies' top summer picks include Amber Group, Voltas Ltd. and Crompton Greaves Consumer Electricals Ltd. among branded durable companies in the air-conditioning space.

The brokerage maintains 'hold' on Havells India Ltd., Whirlpool and Bluestar on relatively rich valuations.

India Meteorological Department has forecast a blazing summer this year, with above-normal duration and frequency of heat waves.

Central India and Maharashtra are predicted to see heat waves from March, which may spread to most other states in subsequent weeks. Most regions across the country are likely to witness above-normal maximum and minimum temperatures. In 2025, India has already recorded its highest-ever mean temperature in February since 1901.

Jefferies' key summer plays are Voltas, Bluestar, Whirlpool, Crompton and Havells. The domestic AC industry could grow up to 30% year-on-year, according to the brokerage, led by a strong first quarter summer and a high base in financial year 2024.

Despite this high base, the industry expects more than 20-25% growth in the fourth quarter. The brokerage notes that the demand in tier 3, 4 towns is now supported by consumer financing. New purchases would likely be over 90% sales as the middle class purchases more.

The brokerage cites Crompton as the market leader in fans with up to 25% share, and residential pumps over 25% share. Fans and pumps could benefit from a good summer as well, the firm added. Whirlpool has a good franchise in refrigerators and washers, totalling 65-70% of sales mix.

With 70% domestic market share in AC contract manufacturing, and 25% overall value share, Amber can be viewed as a demand aggregator. The AC industry in India is under-penetrated, according to Jefferies.

Room air conditioner manufacturing accounts for 40% of annualised sales for Amber, whereas the remaining 60% is components. Amber is largely backward-integrated in ACs except compressors, the brokerage noted.

Apart from the electricals that are set to see a boost this summer, there are also a few other segments that the brokerage expects to do well.

Agri-pipes and pumps would be directly correlated with summer intensity as tough summers change the water levels. Also, construction and housing activity usually peak before monsoon, it noted. Margins tend to expand quarter-on-quarter, with better operating leverage as well.

Finolex Pipes is the market leader in agriculture-pipes as the firm has up to 70% of its product mix being pipes, said the brokerage. For SI, plastic pipes is 65-70% of its sales. Astra is predominantly present in plumbing, and has a minor presence in agriculture as well.

Jefferies cites Crompton as a key player in residential pumps with over 20% market share. The company's share in agri-pumps is likely lower, similar to that of V-Guard, which also has lesser exposure to pumps.