JCH -IN is engaged in the business of manufacturing and marketing of a wide range of air conditioning solutions which include products for homes, offices and retail establishments. Backed by innovation and its expertise in supplying high-quality products, its offerings include home, industrial and commercial cooling solutions like commercial air conditioning, residential and conditioning systems, absorption and centrifugal chiller systems and heating & cooling (HVAC) systems among others.

Established in 1984, the company has grown from strength to strength over time and today JCH-IN is one of the most respected and largest business entities in the air conditioning products industry in India.

Headquartered in Ahmedabad, Gujarat, the company has its state-of-the-art manufacturing facility located at Kadi, Mehsana. It is also one of the largest single roof manufacturing facilities in India spread across an area of over 1,82,000 sq. m.

Apart from manufacturing room and commercial air-conditioners, the company also has forayed into trading of Refrigerators, Air Purifiers & Washing machines within the country.

The company provides aftermarket service through 1235 service points.

Johnson Controls-Hitachi Air Conditioning India Limited adopts world-class technologies to constantly innovate and inculcate newer concepts and advanced features in its products for a comfortable and relaxed life.

Parent companies

Hitachi Cooling & Heating is the global brand of premium air conditioning solutions from Johnson Controls-Hitachi, a joint venture between Hitachi Appliances Inc. and Johnson Controls Inc. Each company has its own heritage that goes back more than 100 years of history and culture. Together they form a leading global brand in premium cooling and heating solutions.

Johnson Controls–Hitachi Air Conditioning was established on October 1st, 2015 as a joint venture between Hitachi Appliances, Inc. (now Hitachi Global Life Solutions, Inc.) and Johnson Controls, Inc. Hitachi Appliances carved out and contributed its air conditioning business to the Joint Venture.

With this joint venture, two rich, 100-year-old cultures and histories have come together to create one exciting new company, serving combined customers with the most diverse product portfolio in the air conditioning industry.

The foreign parent holds 74.25% equity stake in the Indian company.

In its current lineup of products, Hitachi offers approximately 36 new models of Room ACs with 108 SKUs. The company's world-class and efficient design and development team are working relentlessly on the development of new technologies.

In order to keep up with the rising demand of Split ACs in Tier-II and Tier-III markets, the company launched ‘Merai'. These new stylish round-edge design models offer best-in-class features like 100% cooling capacity which in turn, ensures less energy consumption, wide angle deflectors, and powerful air flow, thus providing a long-lasting cooling experience across every corner of the room.

In Window AC segment, the company continued to have more than 10 Models in 2, 3, 4 and 5 Star rating category, offering technologies like Twin Motor, Hot & Cold, Auto Climate, etc.

Special emphasis is being laid on increasing the company's presence in e-commerce sector by collaborating with online retail platforms and modern retail partners.

Home appliances

The company has a strong business in the trading of premium range of Refrigerators and Air purifiers. It offers a range of premium refrigerators starting from 250 ltr capacity. Being aesthetically superior and embedded with consumer convenience focused technologies, these products cater to the niche audience looking for good quality and reliable products. The company's diversified and enhanced range of refrigerators makes the brand more premium and desirable. Presently, the refrigerator range consists of 2-door, 3-Door, 4-door and 6-door refrigerators with unique colour options suitable to the customer's lifestyle and interiors. Hitachi's Refrigerator business grew by 24% in FY18 and is expected to grow exponentially owing to the rising demand of big capacity refrigerators.

Apart from Refrigerators, the company's range of Air Purifiers is developed to purify polluted air and create a healthy environment. The increasing level of air pollution in India is likely to generate awareness about quality of filters resulting in a steady demand of Air Purifiers in the upcoming years.

The Air conditioning market has witnessed a steady growth in terms of volume. Macro factors such as, growing middle class, rising disposable incomes and standard of living, increasing urbanization, availability of financing options and construction of new housing units are all anticipated to further spur the growth of air conditioning market in the residential sector.

Regarding the Commercial air conditioning segment, the transformation of the Indian retail market from being unorganized to organized has led to the construction of shopping malls, retail stores and multiplexes not just in Tier-I cities, but also in Tier-II and III cities. This growth of the retail infrastructure would in turn, increase the demand for air conditioning systems in the years to come. Also, the rapid commercial development such as coming up of new office spaces, special economic zones (SEZs) and corporate hubs along with the proliferation of organized retail outlets are also driving the demand for HVAC installations across the country in the Commercial air conditioning segment. Variable Refrigerant Flow (VRF) segment is expected to grow the fastest due to its energy efficiency, modularity and ease of installation.

The Government's energy efficiency program will lead to faster adoption of energy saving air conditioners such as inverter AC's. This, along with the introduction of various schemes such as EMIs and discounts are expected to boost the market for air conditioners in the coming years.

Opportunities and Outlook

The Government's Smart City Project provides a lucrative opportunity for Smart Air Conditioners' and Home Appliances' manufacturers. This Project will also boost the growth of energy efficient and environment friendly products.

Increasing standards of Bureau of Energy Efficiency (BEE) for energy efficiency in products and focus on promoting Inverter ACs is a huge opportunity for companies who have large lineup of energy efficient products. Demand for energy efficient air-conditioning solutions is likely to spur due to increased focused on curbing Global warming and increase in temperature.

Growth of organized retail formats in Tier II and III towns is a good opportunity for RAC category to deepen its market penetration.

Commercial and hospitality segments will contribute highest to the HVAC demand and likely to grow at 10-11% till FY'22.

Complimented by a wide array of cooling products, the company aims to become the number one HVAC company in India by 2021 along with the enhancement of its market share in both B2c and B2B.

June 2019 quarter results

For the quarter ended June 2019, it registered a 20% rise in sales to Rs 951.91 crore. OPM improved 100 bps to 11.6%, which saw OP rise 32% to Rs 110.69 crore.

Other income fell 61% to Rs 2.29 crore and interest cost grew from Rs 2 lakh to Rs 1.73 crore. As depreciation grew 10% to Rs 12.72 crore, PBT went up 26% to Rs 98.53 crore.

Tax rose 27% to Rs 34.93 crore after which PAT went up 25% to Rs 63.60 crore.

FY 2019 results

In FY 2018 JCH-IN registered a 1% fall in sales to Rs 2241.30 crore. OPM fell 150 bps to 7.3% which saw OP fall 18% to Rs 163.80 crore. PBT fell 13% to Rs 132.37 crore. PAT fell 14% to Rs 85.94 crore.

Valuation

The stock trades at Rs 1483