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Comparing Stocks within the same sector
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Message Icon Topic: Voltas V/s Bluestar V/s Hitachi Post Reply Post New Topic
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Monkey
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Quote Monkey Replybullet Topic: Voltas V/s Bluestar V/s Hitachi
    Posted: 21/Apr/2010 at 9:58pm

I think Voltas & Bluestar are very different from Hitachi. Hence, comparing Voltas & Bluestar with Hitachi would be like comparing Apples with oranges.

Let us look at revenue profile. For year ending March '09, Voltas derived approx 65% of revenue from electro-mechanical projects & services. Revenue from unitary cooling products was approx 21%.
 
For Blue star, electro-mechanical projects contributed approx 70% of revenue whereas share of cooling products was approx 24%.
 
Hitachi has only one segment called home appliances consisting of A/C and Refrigerators. I believe based on data on Indiainfoline that contribution of A/C is 84% of revenue and balance by refrigerators.
 
That is the difference between these companies. I am bullish on urban middle class consumption story due to rising incomes and aspirations. More & more people have less and less tolerance for withstanding scorching summer heat in middle  class India and solution is buying A/C for home when affordability permits.
 
This is where Hitachi scores. Voltas and Bluestar depend more on commercial segment and corporate capex. There are issues like impact of rising interest rates on capex and bargaining power of corporates for large electro-mechanical projects. These issues are relatively not there for Hitachi where retail consumer tired of facing hot summer buys A/C come what may.
 
Penetration of home A/C is rising and has still lot of scope. This gives it size. Therefore, Hitachi has more scope for margin expansion and increasing revenue compared to Voltas and Bluestar. 
 
Basically Hitachi is direct play on retail consumption and rise of urban middle class whereas Voltas and Bluestar do not represent such direct exposure.
 
This does not mean that Voltas and Bluestar are not good stock picks. Their inclusion in TED-XI speaks a lot. However, Hitachi offers direct exposure to urban consumption theme which is its USP.
 
Comments from TED members are welcome.
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j2eeprofessiona
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Quote j2eeprofessiona Replybullet Posted: 21/Apr/2010 at 11:06pm
hitachi is no doubt technically a better A/C but its way too expensive than voltas or blue star. blue star is not very common in the retail area, but comparatively voltas is. Secondly, voltas is around 30% cheaper than hitachi A/C. yes thats correct. I had done a market survey for A/Cs a month back and found hitachi to be around 30-50 % higher than voltas (which in turn is around 10% expensive than the other companies- blue star excluded). and the way indian consumer is value concious i think hitachi and retail consumption should not be linearly linked.
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Monkey
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Quote Monkey Replybullet Posted: 21/Apr/2010 at 11:47pm
Point here is not so much of which A/C is cheaper. Contribution of home A/C in revenue is relatively very less for Voltas and Blue star. Hence, from exposure point of view, Hitachi is more direct play on consumption compared to Voltas or Blue star.
 
Your point on pricing is taken. However, I think as long as Hitachi is able to increase revenue with margin expansion, it should be OK as product positioning is for premium market. We need to watch out as company is still in investment mode. I think it will take some time to reduce debt and stabilise financials.
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mohitrathi8
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Quote mohitrathi8 Replybullet Posted: 21/Apr/2010 at 1:57am
voltas a/c will sell much more in the affordability segment. and even in the imported brands there is lot of competition from panasonic, samsung, lg, etc
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j2eeprofessiona
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Quote j2eeprofessiona Replybullet Posted: 21/Apr/2010 at 9:40am
Originally posted by mohitrathi8

voltas a/c will sell much more in the affordability segment. and even in the imported brands there is lot of competition from panasonic, samsung, lg, etc


yes true, but hitachi A/Cs are technically best in the world.
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j2eeprofessiona
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Quote j2eeprofessiona Replybullet Posted: 21/Apr/2010 at 9:42am
Originally posted by Monkey

We need to watch out as company is still in investment mode. I think it will take some time to reduce debt and stabilise financials.


i guess they started production of one more manufacturing unit this year and going forward that should handsomely contribute to the numbers.
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bearish
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Quote bearish Replybullet Posted: 22/Apr/2010 at 1:54pm
Monkey Ji thank you for initiating this subject. I just got my Hitachi AC serviced and the serviceman was quite professional about his work. He informed me that earlier the company was relying on dealers for service and repair extensions and now the company has direct representatives from their service centres. Looks like they are expanding full on in customer care divisions. He also told me that the ACs are selling like hot cakes. I would think so as whatever money i spent extra over any other brand, i save in electricity bills as it is quite power efficient..just my two cents on this.
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nannu_68
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Quote nannu_68 Replybullet Posted: 22/Apr/2010 at 8:43pm
If it helps!!
I bought a Hitachi 15 days back and now one of my relatives is also going for one!! the dealer does not have time... poor guy is running around like a blue a**e fly!! AC sales have picked up a lot in this season and Indian consumer is graduating from "good enough" to 'good'.. I think this segment is going to throw some BIG surprises when Jun results come out!!


Edited by nannu_68 - 22/Apr/2010 at 8:44pm
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