With a hotter summer expected this year, the writing is on the wall for consumer stocks from the air conditioning and other related industries.
With a hotter summer expected this year, the writing is on the wall for consumer stocks from the air conditioning and other related industries. Analysts at ICICI Direct have picked three stocks that can gain in summers this time around and are also seen favourable on charts. “Consumption discretionary stocks have undergone a decent price/time correction over the past few months. Within the discretionary space, stocks in the air-conditioning segment look relatively better placed on technical charts and relative strength rankings, despite recent volatility in commodity prices,” ICICI Direct said. The brokerage firm has picked Havells India, Voltas, and Amber Enterprises as preferred stocks.
Havells India
Target: Rs 1,320
ICICI Direct analysts say discretionary consumption stocks are now forming a base at key supports. “Havells is poised at long term 52-week EMA with oversold readings post 30% correction from lifetime highs, offering a favourable risk-reward setup,” they said. Havells stock has held its 52-week EMA on numerous occasions over the last decade barring 2020 and made a strong comeback. ICICI Direct expects the stock to head towards Rs 1,320 per share, which is 61.8% retracement of the recent decline.
Fundamentally, Havells is India’s leading electrical appliances & equipment manufacturer with a market share ranging between 6% and 20%. “Revival in the real estate sector will help drive incremental demand for consumer products like fans, lightings, air conditioners, etc, where Havells is a major player,” the report said. The set target price implies 14% upside.
Voltas
Target: Rs 1,470
Voltas stock is seen to have generated a breakout above the falling supply line joining the recent highs signalling a resumption of an up move as strong buying demand. “We expect the stock to head towards Rs 1470 levels as it is 138.3% external retracement of the previous major decline,” said ICICI Direct. Voltas is the leader in the AC industry with close to 26% market share. “Voltas, with its strong supply chain network, will be able to reap the benefit of revival in the real estate industry,” analysts said. The target price suggests an upside of 12%.
Amber Enterprises
Target: Rs 4260
Analysts see that the stock is on the cusp of breaking above last year’s range, which augurs well for the next up move. “The stock has been resilient during the recent market correction and is on the cusp of generating a breakout above the last one’s year range signalling resumption of the up move and offering a fresh entry opportunity,” the report said. The price structure is also believed to be positive as the stock has witnessed a shallow retracement in the last 12 months, retracing just 38.2% of the preceding 12 month up move. The target price of Rs 4,260 hints 14% upside.
ICICI Direct believes that the air conditioner industry has lost two consecutive summers due to pandemic led lockdowns and unusual rains, however, it could make a comeback this year. With input prices soaring companies have hiked prices as well. “We believe the price hikes will be absorbed supported by strong demand for premium products and new product launches, especially by organised players,” they added.