- Voltas sold over 1 million AC units in Q1 of FY27, driven by a diverse product range
- Godrej AC business grew nearly 60% from March to May, surpassing the industry’s 16-17% growth
- Industry price hikes of 15-20% offset higher costs from energy norms and commodity inflation
Air-conditioner makers are reporting a strong start to FY27 after an intense summer boosted demand, with industry leader Voltas crossing the milestone of selling 1 million room air conditioners within the first three months of the financial year.
While the achievement underscores resilient consumer demand despite multiple rounds of price hikes, rivals Godrej Appliances and Blue Star also indicate that industry momentum has remained healthy, led by premium products and improving market penetration.
Kamal Nandi, business head, appliances business, at Godrej Enterprises Group, said the company's air-conditioner business grew nearly 60% during the March-May 2026 period, significantly outpacing the industry's estimated 16-17% growth. He attributed the performance to the company's expanded product portfolio, wider distribution network and its five-year comprehensive warranty offering.
Nandi said the overall room air-conditioner industry is expected to grow 10-12% in FY27, indicating that demand is likely to remain healthy even after a high base this summer.
Voltas, which announced sales of over 1 million AC units in the first quarter, credited its performance to a refreshed product portfolio spanning premium, mid and value segments, stronger consumer engagement and an expanded distribution and service network. The Tata Group company said its sharper segmentation strategy helped it cater to a wider spectrum of consumers across different price points.
Industry executives say consumers have largely absorbed the steep price increases seen over the past year. According to Nandi, the industry has already taken cumulative price hikes of around 15-20% over the last several months to offset higher costs arising from revised energy star labelling norms, commodity inflation and currency fluctuations. However, he indicated that future pricing will depend on the trajectory of raw material costs and broader macroeconomic factors.
"Prices of key commodities such as copper and aluminium continue to remain elevated. The overall cost structure is also influenced by exchange-rate movements, global supply-chain dynamics and logistics costs. The trajectory of these factors will determine whether further price revisions become necessary," Nandi said.
B Thiagarajan, managing director of Blue Star Ltd, echoed similar concerns, saying price hikes of 8-10% have not fully offset commodity and currency inflation, which the company estimates at 12-14%. He added that higher e-waste compliance costs have also weighed on margins, making profitability a greater priority than pursuing aggressive market share gains in the near term.
Consumer demand has remained broad-based, although premium products continue to outperform the mass segment. Nandi said buyers are increasingly looking beyond basic cooling and are opting for energy-efficient, connected and feature-rich air conditioners with better aesthetics and health-focused technologies. This trend is accelerating premiumisation across the category.
At the same time, Nandi said demand for entry-level products remains resilient, supported by rising temperatures, increasing air-conditioner penetration in smaller towns and first-time buyers entering the market. Despite inflationary pressures, consumers continue to prioritise cooling appliances, while replacement demand has also strengthened.
Thiagarajan said Blue Star has strengthened its presence across affordable, affordable-premium and premium categories rather than focusing solely on high-end products. The company estimates that industry secondary sales grew more than 30% year-on-year during April-May, while primary sales increased 20-25% by volume and 25-30% by value. Blue Star expects low-to-mid teen volume growth in the first quarter while maintaining its value market share of around 14%.
Inventory levels across the industry also appear healthy after the summer season. Nandi said dealer inventory remains at comfortable levels, with stocks aligned to expected demand and no excessive build-up. He added that both primary dispatches and secondary retail sales remained robust through the peak season and expressed confidence of outperforming the industry during the festive season as well.
According to Thiagarajan, channel inventory is no longer a concern after the disruptions witnessed in FY26, which was affected by an uneven summer, GST-related buying deferment, energy-label transitions and supply-chain volatility. He said the company sees the possibility of channel stocking in the coming quarters if retail demand continues to remain strong.
While cooling demand will now moderate with the end of summer, manufacturers remain optimistic that rising incomes, premiumisation and deeper penetration into smaller cities will continue to drive category growth. However, the trajectory of commodity prices, exchange rates and input costs will remain key variables determining pricing decisions and profitability over the rest of the financial year.
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