Heatwave bad for people but profitable for these companies!

Monsoon has knocked on Kerala’s door on May 30, a day earlier than anticipated. However, relief from the intense heat is still nowhere in sight. The situation is such that the country is experiencing its most severe heatwave yet. The temperature in Delhi has crossed the 50-degree mark for the first time. In at least 37 cities across the country, the temperature has soared above 45 degrees celsius. Despite this scorching heat, several sectors and companies are benefiting from it. Which companies are these? How are they benefiting? And can investments be made based on this theme? Let’s find out.

The weather department has issued a warning for intense heat for the months of May, June, and July, spanning three months. As a result, brokers and financial analysts anticipate companies involved in the production of air conditioners, dairy products, consumer durables, especially fans and coolers, beverage manufacturing and power businesses to benefit. According to Geojit Financial Services, the consumer durables sector generally remains robust in the fourth quarter. Strong performance is also expected in the first quarter of FY25. Brokerage houses prefer companies like Havells, Voltas, Symphony and V-Guard in this sector. Additionally, there could be an increase in sales for Blue Star in the AC segment and Crompton Greaves and Bajaj Electricals in the fan segment.

Moreover, to beat the heat, people consume more dairy products like ice cream, yogurt, buttermilk and lassi, along with cold beer. This consumption pattern is expected to benefit dairy companies like Dodla Dairy and Modern Dairies, as well as companies like Vadilal, Varun Beverages, United Breweries, and HUL. Furthermore, there could be an increase in demand for companies involved in the production of refrigerant chemicals such as SRF, Gujarat Fluoro and Navin Fluorine.

The most significant aspect is that all these sectors require power. In Delhi, the power demand has reached a peak level of 8302 MW for the first time. This is expected to benefit companies like JSW Energy, NTPC, CESC and Tata Power. As demand for electricity increases, it affects supply, benefiting companies like Cummins, Kirloskar Oil Engines, Exide and Amara Raja, which produce gensets, UPS and inverters.

Now, the crucial question is whether one can still make purchases considering this theme, given that May is almost over. Arun Mantri, the founder of Mantri FinMart, believes that the impact of rising temperatures has already been factored into the share prices of most sectors. However, NHPC can be bought with a target of ₹125 and Tata Power with a target of ₹495 for a perspective of 1-2 months. During declines, Exide Industries can also be bought around ₹460-470 with a target of ₹555-560.

Overall, this year’s heatwave has broken records from previous years. As a result, the increased demand for many companies’ shares has already had an impact. However, according to estimates released by the weather department, investments can still be made in the shares of select companies involved in producing products related to cooling to find relief from the heat.