Amber Enterprises shares surged 15.2 percent intraday on October 16 after the Directorate General of Foreign Trade banned the import of air conditioners (AC).
Among others as a sentiment effect, Voltas, Blue Star and Johnson Control also gained 4-5 percent, while Havells India (which owns Lloyds) gained around 2 percent intraday.
The Directorate General of Foreign Trade (DGFT) has come with a notification where they have put AC imports with refrigerants under the prohibited list.
"This is in line with the government thinking of reducing import dependence in this segment. Majority imports of in this segment come from China and Thailand," Dolat Capital.
The brokerage feels this will impact the complete AC units, which is around 28-30 percent of AC imports volumes.
Majority of imports in ACs are at the component level, with compressors being the main item or imports as separate indoor units (IDUs) and outdoor units (ODUs).
"This should not significantly impact the listed players like Voltas, Blue star, Havells (Lloyds) who don't have much import of full AC units. These players in any case have their own assembly/manufacturing units and import at the component levels," Dolat Capital said.
Lloyds (Havells) used to import full units earlier but it is also now assembling here at its unit in Rajasthan.
The brokerage feel this move will increase opportunities for contract makers like Amber Enterprises, which can see higher assembly work. The companies are likely to import ODUs without refrigerant and get the refrigerant filled locally, it said.
However, the move by DGFT will impact foreign brands which rely on direct imports like Mitsubishi/ General and may now drive them to get more work done locally or lose some share to local players, according to Dolat Capital.
While having Voltas as preferred AC play, the brokerage said industry has been preparing to increase local manufacturing for a couple of years now. This comes in the off season with another 4-5 months for February/March season, giving time for industry, it added.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.