Prolonged monsoon hit air conditioner sales in Q2
Companies are anticipating a pick-up in sales and the GST benefit to come in with the start of 2026, which could hopefully have a hotter summer.
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MOORTHY M
A prolonged monsoon allied to muted retail demand hit the sales of room air-conditioners (AC) offsetting a reduction in GST from 28 per cent to 18 per cent, and companies in the segment have now set their sights on the fourth quarter of the current fiscal year for demand to come back.
While air-conditioner makers witnessed a brief demand uptick after the GST 2.0 was implemented, it has dwindled post the festive season.
“For the period September 22nd till Diwali day, we witnessed, as far as Blue Star is concerned, more than 35 per cent sales, but post that, there is a lull period,’ said B. Thiagarajan, Managing Director, in an earnings call.
“We will continue to maintain our fundamental principles, that is grow faster than the market, control the expenses, both operating as well as capex, find ways and means to maintain the margins, or contain the deterioration of the margins, and close the year hoping that summer sets in early,” he added.
Companies are anticipating a pick-up in sales and the GST benefit to come in with the start of 2026, which could hopefully have a hotter summer.
“The Unitary Cooling Products (UCP) business experienced an atypical quarter with muted retail offtake caused by the lean season and delayed consumer purchases during the period mid-August to the last week of September, owing to the GST rate reduction leading to a higher channel inventory. The reduction of GST from 28 per cent to 18 per cent will see a major traction in the coming quarters as channels start stocking up for the upcoming season and the impending BEE energy efficiency transition effective January 2026,” said KV Sridhar, Chief Financial Officer of Voltas.
Another player Whirlpool of India, which had been gaining market share for five atraight quarters, saw a market share loss in Q2 due to the overall subdued demand in the segment. The management is expecting some demand resurgence in the current quarter.
Inventory
With low demand for personal cooling products, air-conditioner makers are holding larger inventories in stock.
“While post-summer, we thought the inventory would get liquidated during the festival season, but due to this GST interruption, it did not. Our inventory level, as of the date, is around 65 days of sales. Ideally, it should be only 45 days of sale,” said Blue Star’s Thiagarajan.
“I do not know the industry inventory levels, but I know that the industry inventory days are much higher than 65 days. So, this means it is going to be a period where all these inventories have to find a way to the market. So the channel, as well as manufacturers’ inventory liquidation, will be the top priority. From 1st January, the manufacturers have to produce new products or re-label the existing products, depending on the energy efficiency level,” he said.
“With retail momentum expected to pick up during the upcoming quarter and production normalisation across facilities, inventory levels and cash cycles are anticipated to revert to healthier levels in H2 FY26. Just to give a summarisation on the outlook’s strong strategic direction, Voltas enters the second half of FY26 with renewed optimism and strong strategic alignment,” added V Sridhar.
Published on November 17, 2025
