Demand revival for cooling products to push Havells, Voltas share prices; ICICI Direct sees 13-14% return in 3 months in these stocks

Marred by consecutive lockdowns and erratic rains, room air conditioners (RAC) industry from consumption discretionary space has seen decent price correction, however, it is poised to do well this summer amid expected huge demand.  

Frontline brands such as Havells and Voltas will be among the key beneficiaries of a revival in demand for cooling products due to their strong supply chain network and ability to pass on higher raw material prices. 

"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," says ICICI Direct.  

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On Thursday's closing price, the brokerage sees about 13 to 14% upside in Havells, Voltas and Amber Enterprises within 3 months. On Monday, these shares gained between 1 to 1.5%.  

Havells India | Target Price: Rs 1320 

Havells India, India’s leading electrical appliances & equipment manufacturer with a market share ranging between 6% and 20%, is likely to gain with the revival in the real estate sector, which will help drive incremental demand for consumer products like fans, lightings, air conditioners, etc, where Havells is a major player.

Source: ICICI Direct

Havells is poised at long term 52-week EMA with oversold readings post 30% correction from lifetime highs, offering a favourable risk-reward setup, says the brokerage.  

Voltas | target Price: Rs 1470 

A market leader in the Indian AC Industry with market share of ~26%, Voltas Voltas is a net cash company with prudent working capital management. It is also into the business of providing engineering solutions in the HVAC industry globally.

Source: ICICI Direct

Amber Enterprises | Target Price: Rs 4260 

It is a market leader RAC industry with a volume market share of ~25%. It also manufactures AC components and provides mobility solutions (manufacturing AC for railways, buses etc).

Source: ICICI Direct

"The stock has witnessed a shallow retracement in the last 12 months, retracing just 38.2% of the preceding 12 month’s up move (| 921-3662) signalling positive price structure and a higher base formation at rising 52 weeks EMA (placed at | 3150)," says ICICI Direct.  

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)