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Summer effect: 3 out of 4 AC companies' stocks turn multibaggers in FY21

The sales of cooling devices generally go up in summers which auger well for the earnings of companies operating in the industry. Sales of air conditioners (ACs) have been on the rise in India for past few years, thanks to the rising temperatures and higher disposable income.

April 01, 2021 / 11:55 AM IST
It's just the onset of the summer season in India, and many parts of the country have already started to experience heatwave conditions. The sales of cooling devices generally go up in summers which auger well for the revenues of companies operating in the industry. Sales of air conditioners (ACs) have been on the rise in India for past few years, thanks to the rising temperatures and higher disposable income. In FY21, three out four listed AC companies turned multibaggers, surging 98-166 percent. And, the fourth one gave a decent return of 22 percent in FY21. In FY20, these companies' return on equity (ROE) and return on capital employed (RoCE) ratios were also in double digits. ROE is a financial ratio calculated by dividing net income of a company by shareholders' equity, according to Investopedia's definition. Meanwhile, ROCE is a measure of a company’s profitability in terms of all the capital employed invested in the business. While we have stated only 2 financial parameters here, it is best to look at other performance ratios, fundamental and technical factors before investing in a stock. Moneycontrol's SWOT analysis data suggest that most of these companies have more strong points than weaknesses.
It's just the onset of the summer season in India, and many parts of the country have already started to experience heatwave conditions. The sales of cooling devices generally go up in summers which auger well for the revenues of companies operating in the industry. Sales of air conditioners (ACs) have been on the rise in India for past few years, thanks to the rising temperatures and higher disposable income. In FY21, three out four listed AC companies turned multibaggers, surging 98-166 percent. In FY20, these companies' return on equity (ROE) and return on capital employed (RoCE) ratios were also in double digits (Data Source: ACE Equity). ROE is a financial ratio calculated by dividing net income of a company by shareholders' equity, according to Investopedia's definition. Meanwhile, ROCE is a measure of a company’s profitability in terms of all the capital employed invested in the business. While we have stated only 2 financial parameters here, it is best to look at other performance ratios, fundamental and technical factors before investing in a stock.
Amber Enterprises India | In FY21, the stock rose 166 percent from Rs 1225.80 on March 31, 2020 to Rs 3259.75 on March 30, 2021. In FY20, the company's RoE was 15.53 percent and RoCE was 17.08 percent.
Amber Enterprises India | In FY21, the stock rose 166 percent from Rs 1225.80 on March 31, 2020 to Rs 3259.75 on March 30, 2021. In FY20, the company's RoE was 15.53 percent and RoCE was 17.08 percent.
Blue Star | In FY21, the stock rose 98 percent from Rs 460.65 on March 31, 2020 to Rs 914.10 on March 30, 2021. In FY20, the company's RoE was 16.99 percent and RoCE was 19.12 percent.
Blue Star | In FY21, the stock rose 98 percent from Rs 460.65 on March 31, 2020 to Rs 914.10 on March 30, 2021. In FY20, the company's RoE was 16.99 percent and RoCE was 19.12 percent.
Johnson Controls - Hitachi Air Conditioning India | In FY21, the stock rose 22 percent from Rs 2151.10 on March 31, 2020 to Rs 2616.65 on March 30, 2021. In FY20, the company's RoE was 12.84 percent and RoCE was 14.95 percent.
Johnson Controls - Hitachi Air Conditioning India | In FY21, the stock rose 22 percent from Rs 2151.10 on March 31, 2020 to Rs 2616.65 on March 30, 2021. In FY20, the company's RoE was 12.84 percent and RoCE was 14.95 percent.
Voltas | In FY21, the stock rose 107 percent from Rs 478.85 on March 31, 2020 to Rs 992.85 on March 30, 2021. In FY20, the company's RoE was 14.06 percent and RoCE was 18.70 percent.
Voltas | In FY21, the stock rose 107 percent from Rs 478.85 on March 31, 2020 to Rs 992.85 on March 30, 2021. In FY20, the company's RoE was 14.06 percent and RoCE was 18.70 percent.
Ritesh Presswala Research Analyst at Moneycontrol
first published: Apr 1, 2021 11:55 am

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