Subdued demand for room air-conditioners on the back of unseasonal rain has cooled the bottomline of companies in this segment for the quarter ended June 30, 2025 (Q1FY26).
While Voltas posted a 58 per cent drop in net profit in Q1FY26 over Q1FY25, Blue Star saw its bottomline shrink by 28.4 per cent. Among the other listed players, Johnson Controls Hitachi Air Conditioner and Epack Durable saw their net profit fall by 58 per cent and 2.17 per cent, respectively, during Q1FY26 compared with Q1FY25.
“Q1FY25 had delivered an exceptional summer with soaring temperatures and heatwaves, driving air conditioner sales to record highs. Voltas had then registered a 65 per cent growth in AC volumes, gaining further market leadership.
“During Q1FY26, it represented the opposite scenario. Summer arrived late, was marked by cooler temperatures across large parts of the country and gave way early to monsoon conditions.
“As a result, the peak air conditioner, commercial refrigerator and air cooler selling season was shortened by several weeks, leading to a substantial drop in primary offtake,” K.V. Sridhar, CFO, Voltas, told analysts at the Q1FY26 earnings call.
In a statement on the analysis of its first-quarter results, Voltas said that it had anticipated a continuation of the demand trends from the previous year. But as temperatures remained subdued, retail sales in metros and tier 2 and 3 cities were below expectations, leading to higher inventories, and factories had to scale back operations mid-season to avoid overproduction.
The under-absorption of fixed costs with higher warehousing and holding expenses further put pressure on the profitability.
“We view this as a one-off situation and are confident that our ongoing investments in innovation, channel expansion, and customer-centricity will enable us to overcome short-term headwinds and continue delivering sustainable growth in the quarters ahead,” said Pradeep Bakshi, MD and CEO, Voltas Limited.
Blue Star MD B. Thiagarajan said in the Q1FY26 earnings call that the company had commenced the financial year with the hope that the summer season would be “an impressive one” with 25-30 per cent market growth, and the company would also grow. But unseasonal rains have led to a subdued demand.
“While it (Q1FY26) is not a disaster, it is a disappointing one. But the long-term prospects for the room air conditioner business at a CAGR of 19 per cent over the next five-year period should happen, and we firmly believe in that,” said Thiagarajan.
“We have seen a temporary slowdown in Q1FY26, primarily due to unseasonal rains that have impacted sales, especially for air conditioners. However, this appears to have been a short-term disruption.
“The overall growth story for air conditioners remains extremely strong,” Ajay DD Singhania, MD and CEO, Epack Durable, told analysts at the Q1FY26 earnings call.
“The consumer durables division delivered revenue growth of 33 per cent year-on-year despite a challenging residential air conditioner season. We remain optimistic of outpacing RAC industry growth for the year,” said Daljit Singh, MD, Amber Enterprises.
