Summer stocks: Power, FMCG, consumer durables and 2 other sectors set to soar with rising temperatures; check top picks

The summer season, which spans from March to May, is going to be hotter than usual across most parts of the country, as per the forecast of the Indian Meteorological Department (IMD).

According to this projection, the nation is expected to have above-normal temperatures and a higher-than-average number of heat wave days from March to May. 

In CY23, the country experienced its second warmest year in 122 years.

As the sweltering summer months pose challenges for agricultural productivity and animal husbandry, certain sectors emerge with promising growth prospects. Among them, consumer durables, FMCG, and power sectors anticipate a rise in demand amidst the seasonal shift. Moreover, with summer coinciding with holiday seasons, sectors such as tourism, airlines, and amusement park companies are poised for a surge in activity. 

Consumer durables

As temperatures rise, there may be increased demand for consumer durables such as air conditioners, fans, refrigerators, and cooling appliances to mitigate the effects of heat waves.

Summer sales are crucial, and they set the tone for annual growth expectations for consumer durables, especially cooling products, during the year. Companies involved in the production and distribution of these products could see a boost in sales as consumers prioritise comfort and cooling solutions.

Also Read: India's consumer goods sector longs for a rural revival

BoB Capital Markets, a domestic brokerage firm, anticipates a sectoral recovery driven by the strengthening demand for cooling products such as ACs and fans with the onset of summer.

Market leaders like Voltas, alongside other key players such as Blue Star and Havells, are poised to capitalise on the increasing temperatures. Similarly, in the fan segment, Crompton Greaves Consumer Electricals and Bajaj Electricals anticipate a notable uptick in sales as the summer season progresses. 

In an interview with CNBC-TV18, B Thiagarajan, Managing Director of Blue Star, expressed optimism about the upcoming summer season. He affirmed that the company is poised to surpass the industry average growth rate during the April–June quarter of the next financial year.

Thiagarajan informed the news agency that Blue Star aims to achieve a growth rate of 25% in Q1FY25, outpacing the industry growth projection of 20%. Additionally, he indicated that for the entire fiscal year, the company anticipates a growth rate of 20%, compared to the industry's forecast of 15%.

FMCG

As temperatures rise, consumer preferences may shift towards summer-specific products such as soft drinks, ice creams, and other cold beverages. The summer season holds significant importance for FMCG companies, contributing 20% to 25% of their annual sales, according to industry experts.

Furthermore, the domestic alcoholic beverage sector foresees strong sales throughout the warm summer season, projecting an increase in beer consumption.

Companies like Dabur, Varun Beverages, United Breweries, and Som Distilleries and Breweries are poised to benefit from the increased sales opportunities arising from these trends.

Also Read: Kantar predicts subdued growth for FMCG sector through September quarter

Power 

The country's power consumption is experiencing rapid growth, primarily driven by increasing industrial demand. This surge in power consumption has propelled the stock prices of companies within the power sector, including power generators, distributors, and financing firms, to reach unprecedented highs.

Recent estimates suggest that peak demand is poised to reach a new milestone of 260 GW this summer. In the summer of 2023, peak power demand reached 243 GW, surpassing the projected 229 GW. This consistent upward trend in power demand is a clear indicator of the fast-growing economy.

With the substantial increase in power consumption, companies such as Adani Green Energy, Adani Power, NHPC, SJVN, Power Grid Corporation of India, NTPC, REC, Bharat Heavy Electricals, Tata Power, and JSW Energy are well-positioned to reap the benefits.

Tourism

Rising temperatures can lead to shifts in travel patterns as individuals seek cooler destinations or engage in outdoor activities. Tourism sectors in regions with milder climates or unique natural attractions may experience increased visitation, driving growth in hospitality, recreation, and related industries. 

Furthermore, coastal tourism might thrive as people seek relief from heat waves by visiting beaches and coastal resorts. In the recent interim budget 2024-2025, the government announced plans for tourism infrastructure and amenities in Lakshadweep, aiming to stimulate domestic tourism and create employment opportunities.

Also Read: India’s sustainable-tourism industry to grow to $152 million by 2032: Report

Stocks set to benefit from this trend include companies operating in the tourism and hospitality industries. For instance, travel agencies like Yatra Online and Easy Trip Planners are likely to see a rise in bookings as travelers plan their vacations. 

Additionally, hotel chains such as Indian Hotels Company Limited (Taj Group), Lemon Tree Hotels, EIH (Oberoi Group), and Mahindra Holidays & Resorts are expected to experience increased occupancy rates and higher revenue during the holiday season.

Further, amusement park companies such as Wonderla Holidays are also going to see a rise in business on the back of the upcoming holiday season. 

Aviation

With the increase in tourism during the summer season, the aviation sector also experiences a boost in activity. As more people choose to travel to various destinations for leisure and vacations, airlines witness a surge in passenger demand. 

Airlines such as IndiGo, SpiceJet, and Air India, along with airport operators like GMR and GVK, stand to benefit from the increased tourism as they cater to the rising number of travelers seeking air transportation to their preferred holiday destinations.

Disclaimer: We advise investors to check with certified experts before making any investment decisions.