No correlation between heat wave and demand for fans, coolers and ACs: Report
1 min read 03 Mar 2023, 04:16 PM ISTICICI Securities‘ report said that consumers continue buying cooling appliances irrespective of the severity of the heat wave
PremiumNew Delhi: Intense heat waves and extreme weather conditions have little bearing on revenue growth of companies selling products such as fans, coolers, and air conditioners, a detailed analysis of historical data by brokerage ICICI Securities has found.
“On analyzing the heat waves in past three decades (FY92-FY22) and revenue growth of summer product companies (fan, cooler, air conditioner, refrigerator), we note the data does not indicate any such trend that revenue growth in heat wave years is higher than non-heat wave years. There is no positive or negative correlation," analysts at ICICI Securities said in a note on Friday.
In its data, the brokerage said that consumers continue buying cooling appliances irrespective of the severity of the heat wave. India is set to witness yet another severe summer.
Analysts at the brokerage concluded that a heat wave in a year does not lead to higher revenue compound annual growth rate (CAGR) for white goods and durable companies. “We have also analyzed the data in three long-period intervals of 10 years over FY92 to FY22. There were three heat waves during FY92 to FY02, no heat wave during FY02-FY12 and four heat waves during FY2012 to FY22. We note the revenue CAGR for summer product companies was highest during FY02-12 when there was no heat wave," it added.
Summers typically help companies see a spike in products such as cold drinks and ice creams as consumers on-the-move demand such products. One would assume that similar trends are reported by companies that manufacture fans and coolers; however, the story for durables is different, according to the analysis by ICICI Securities.
The brokerage also added that there is no correlation between extreme heat and annual sales of durable companies. “We have analysed yearly revenue growth of white goods and durable companies in heat wave years as well as non-heat wave years. The data does not indicate that revenue growth is higher in heat wave years versus revenue growth in non-heat wave years," they said.
