AC Stocks To Buy: Hot Summer, Cool Profits! Voltas, Blue Star Brokerages Pick Top Cooling Stocks For Strong Returns

Emkay Global Financial Services, in its latest brokerage report, has urged investors to look beyond the recent volatility in India’s air-conditioner market, viewing the sharp correction in stocks like Voltas and Blue Star as a buying opportunity. This comes as unseasonal rains, and cooler temperatures have dented demand during the critical summer quarter—typically the most lucrative period for the room air conditioner (RAC) segment.

According Emkay Global, Voltas and Blue Star shares have each fallen over 30% in calendar year 2025 so far, as April and May failed to deliver the heat that drives peak-season sales. Despite the short-term disruption, Emkay believes the sector’s long-term growth trajectory remains intact.

“Our past 15-year analysis suggests three similar periods of weak summers (CY12-13, CY15, and CY18), where UCP revenue growth was soft (down 3%/up only 7%), while stocks fell ~30–40%. Notably, each weak summer was followed by a sharp rebound, with UCP revenue rising ~15–20% amid structural tailwinds like premiumization, low penetration, and improving affordability driving stock rallies of ~40–160% over the next 12-18M.,” Emkay noted in its report.

It is to be mentioned that UCPs are unitary cooling products (UCPs), which are packaged air conditioning and heating systems, often including both indoor and outdoor components.

Emkay Global forecasts a modest 3% decline in RAC industry volumes for FY26 but anticipates a robust 18% recovery in FY27. The firm has made slight downward revisions to earnings estimates for both companies, trimming FY26/27 EPS by 7%/2% for Voltas and 8%/10% for Blue Star.

Also Read: Unprecedented AC Demand Forces Makers to Airlift Components from Abroad | Republic World

Attractive valuations post correction

Following the recent sell-off, valuations have reached compelling levels. Voltas is now trading at around 3.2x its forward UCP price-to-sales ratio—close to the lows seen during the pandemic. Blue Star, too, is trading below its historical average.

Against this backdrop, Emkay has reaffirmed its ‘Buy’ rating on Voltas, maintaining a target price of Rs 1,450. It also retains a ‘Buy’ on Blue Star, albeit with a revised target of Rs 1,850, down 11% from earlier estimates.

Immense potential for recovery 

The report also highlights that demand often rebounds sharply after a weak summer. In years where a mild season was followed by harsher weather, both unit sales and stock prices saw a significant uplift. For example, after subdued sales in early 2014, rising temperatures in the second half of the year helped fuel double-digit revenue growth and triple-digit stock gains for leading RAC brands, claimed Emkay Global.

Emkay remains confident that the underlying drivers of the Indian RAC market—low penetration, rising urban incomes, and a trend toward premiumisation—will continue to support long-term growth.

“Our analysis suggests that weather-related demand volatility is cyclical in nature and not a structural issue. While CY25 marks the fourth major weak summer over the past 15 years, the consistent pattern of sharp stock corrections has also been followed by stronger rebounds in both—volumes and stock prices, when summer intensity returns. Recent stock corrections in CY25 (~30%+ CY25 YTD) appear driven more by temporary weather disruptions than by deterioration in the long-term fundamental story.,” the brokerage said.