Consumers Are Increasingly Considering The Lifecycle Cost Of A Product Than Just The Initial Capital Cost

How has the AC market in India grown over the past 4-5 years? Also, where is Daikin placed?

The industry has grown at 15% CAGR over FY16-20E.We estimate the Indian room air conditioner market would grow from 4mn units in FY16 to 7mn in FY20, a 15% CAGR. The growth would be driven by rising penetration of ACs (3-4% currently vs. 30% global average), higher disposable income, growing urbanization and year-round usage of ACs. For FY17, we build in 15% industry growth and this comes after a subdued CY16/FY17, where unseasonal rainfall adversely impacted sales of air conditioners (ACs); we expect industry volumes to increase 10% YoY in CY17/FY18. Our recent channel checks indicate a very strong pick-up in volumes over the past 2-3 weeks post the sharp rise in temperatures across the country. If the recent trend in summer seasons sales continues, our FY17 industry growth at 15% YoY has an upside risk to it and industry growth could be upwards of 20%.

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