Johnson Controls-Hitachi Air Conditioning India (JCH-IN) posted revenue of Rs3.1bn in 2QFY21, down 18% YoY and below our estimate of Rs3.3bn. Cooling Products revenue fell 17% YoY to Rs2.9bn (94% of total sales) while Design & Development sales fell 18% YoY to Rs197mn. Gross margin rose by a healthy 220bps YoY to 37.8%. EBITDA loss stood at Rs51mn compared to our estimate of Rs40mn loss as 2Q is a seasonally weak quarter for JCH-IN. Operating loss and higher depreciation (up 48% YoY to Rs177mn) led to net loss of Rs190mn compared to our estimate of net loss of Rs127mn. JCH-IN is a key beneficiary of the shift in government policies to promote AC manufacturing in India by making imports costlier. JCH-IN possess backwardintegrated manufacturing capabilities, India-specific R&D;, supply chain support from group...

While room Air-Conditioners (AC) are mainly sold to individuals, there is a large market for institutional buyers in this segment. With its Logicool range, the company has added significantly to this segment and has increased the number of institutional buyers from 58 to 90.