Summer Of '25 Too 'Thanda Thanda Cool Cool' For AC Sales
Channel inventories have also piled up, currently sitting at three to four weeks, putting further pressure on volumes.
India's air conditioner market, which typically thrives in its blistering summers, has been caught off guard this once. Instead of soaring temperatures, the skies that opened up. Unseasonal rain in May and June have sent a chill through the industry, quite literally.
Jefferies estimates the room air conditioner industry is staring at a sharp 15–20% year-on-year sales decline this summer. And it's not just the weather to blame: last year's scorching heat set a high base, compounding the impact.
Channel inventories have also piled up, currently sitting at three to four weeks, putting further pressure on volumes. As a result, Jefferies expects sales in the unitary cooling products segment to fall in lower-double-digits for both Voltas and Blue Star in the first quarter of the fiscal.
The brokerage has accordingly trimmed its earnings-per-share estimates for the next two fiscals by about 6%. But the next big trigger for RAC volumes, Jefferies says, could come in the third quarter, when dealers rush to clear stocks ahead of new BEE energy efficiency norms kicking in from Jan. 1, 2026.
Between the two key players, Jefferies is backing Voltas with a 'buy,' with a price target of Rs 1,680, citing a better risk-reward at current valuations, while it maintains a 'hold' on Blue Star at Rs 1,780.
Meanwhile, the Voltas management, noted that the first quarter has indeed been "relatively challenging" for room AC sales due to weather disruptions. Voltas remains focused on retaining its market leadership in the unitary cooling products space but is determined to strike a balance between volumes and margins. In its project business, both domestic and international, Voltas is targeting sustainable margins of 4–5%.
Voltas-Beko has become the second-largest player in the air coolers segment and is steadily gaining ground in washing machines and refrigerators, aiming for a 10% market share by year-end.
Blue Star, on the other hand, has had to hit the brakes. Managing Director B Thiagarajan told NDTV Profit that the company slashed production by 20% in May and over 25% in June as sales failed to take off. "Right from April first week, it was bad news," he said, adding that the market may have contracted by nearly 25% already this season.
The company had entered the summer riding high on hopes of another record year, eyeing over 25% growth. But early monsoons and April showers had other plans.
