Air Conditioning Stocks and Power Firms Boosted by Forecast of Heatwave, Driving Up Demand Expectations

Summer Demand Drives Shares of Air-Conditioning and Power Utility Companies

Shares of air-conditioning and power utility companies traded higher in Monday's afternoon session, as forecasts of a sharp rise in temperatures across India boosted expectations of strong summer demand. The India Meteorological Department (IMD) flagged a steady rise in temperatures across large parts of the country, with northwest India expected to see a sharp increase in maximum temperatures.

The IMD has projected a 3-6 degree Celsius rise in maximum temperatures across northwest, central, and eastern India over the next few days. Temperatures in some parts of the country could touch 45°C, with Delhi likely to see its first 40°C day of the year soon. Several regions, including parts of Gujarat, Maharashtra, Odisha, and Andhra Pradesh, are likely to experience hot and humid conditions, with heatwave alerts issued for pockets of central and eastern India.

The outlook for rising temperatures typically drives demand for room air conditioners, air coolers, and refrigeration products, benefiting companies across the cooling value chain, including OEMs and component suppliers. Among cooling-related stocks, Voltas Ltd rose 2.9 percent to Rs 1,354.30, while Blue Star Ltd gained 1.6 percent to Rs 1,716.30. Newly listed LG Electronics India Ltd was up 1.8 percent at Rs 1,504.50.

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Ancillary and contract manufacturing players saw a mixed trend, with PG Electroplast Ltd up 0.4 percent and Epack Durable Ltd marginally higher, while Amber Enterprises India Ltd slipped 0.3 percent. Power utility stocks also advanced, supported by expectations of higher electricity demand during peak summer months. NTPC Ltd rose 1.5 percent, while Adani Power Ltd, Tata Power Ltd, and JSW Energy Ltd gained between 3.5 percent and 3.6 percent. NHPC Ltd was also up 0.6 percent.

Higher temperatures tend to push up power consumption, especially from residential and commercial cooling demand, often leading to peak load conditions and improved plant load factors for power generation companies.