Consensus expectation of earnings upgrade due to heat wave appear overdone; Trivial change to DCF valuations
We differ from consensus that ongoing heat wave is likely to result in strong valuation upgrade for fan, cooler or air conditioner companies. Chief reasons: (1) Fan companies had sold inventory of non-star rated fans in Q3FY23 and there is ~3 weeks extra inventory in trade which will get liquidated in Q4FY23. It is likely to result in lower primary sales for fan companies in Q4FY23.