Voltas V/s Bluestar V/s Hitachi
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Comparing Stocks within the same sector
Forum Discription: Here we would discuss the various stocks that are available within the sector and provide insights on the better option.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2735
Printed Date: 26/Apr/2024 at 10:33am
Topic: Voltas V/s Bluestar V/s Hitachi
Posted By: Monkey
Subject: Voltas V/s Bluestar V/s Hitachi
Date Posted: 21/Apr/2010 at 9:58pm
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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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Replies:
Posted By: j2eeprofessiona
Date 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. |
Posted By: Monkey
Date Posted: 21/Apr/2010 at 11:47pm
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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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Posted By: mohitrathi8
Date 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 |
Posted By: j2eeprofessiona
Date Posted: 21/Apr/2010 at 9:40am
yes true, but hitachi A/Cs are technically best in the world. |
Posted By: j2eeprofessiona
Date Posted: 21/Apr/2010 at 9:42am
i guess they started production of one more manufacturing unit this year and going forward that should handsomely contribute to the numbers. |
Posted By: bearish
Date 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. |
Posted By: nannu_68
Date Posted: 22/Apr/2010 at 8:43pm
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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!! ------------- nannu |
Posted By: mohitrathi8
Date Posted: 22/Apr/2010 at 11:30pm
| it has already run up nearly ten times from its low so there are some reservations.. but then it could always double from here too.. :-P |
Posted By: Khan
Date Posted: 07/Jun/2010 at 3:43pm
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http://www.smartinvestor.in/market/Marketnews-30867-Marketnewsdet-ANALYSIS_Voltas_vs_Blue_Star.htm - Voltas vs Blue Star ------------- If you do what you've always done, you'll get what you've always gotten |
Posted By: Bhupan
Date Posted: 11/Mar/2011 at 8:45pm
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deleted
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Posted By: manish_okhade
Date Posted: 12/Mar/2011 at 9:13am
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Initially i too got tempted with indian consumption theory in domestic appliance place but on market survey i found the list of players so big that its difficult to determine who will wield the purchasing power.
-Hitachi
-Samsung
-Bosch
-IFB
-Blue Star
-Godrej
-Voltas
-Whirlpool
- and so on.......
AC, Fridge, Oven etc are still like commodity. There is nothing which makes any of them distinguished. I equate them to textile sector where any tom, dick and harry can make cloths if capital is available.
Success factors are RM cost mgmt, Marketing Budget/skills (extremely important), after sales support and dealership network. Whirlpool seems to be scopring on all front. But again this is something other platyers will also acheive unlike for example Maruti Automobiles of Car segment where Maruti is in India for past 40 yeares so it will take lots of time for new entrants to catch up.
I give it a pass.
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Posted By: subu76
Date Posted: 12/Mar/2011 at 9:38am
Manish Bhai, are purchase decisions and differentiation here based purely on price and price alone? (for these to be a true commodities like say textiles)
I find that the answer is no....a lot of people have pretty strong brand preferences and some products do have differentiation features. For e.g. I find that for ACs i prefer Hitachi and for refrigerator i prefere Whirlpool
Please lemme know if my understanding is wrong.
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Posted By: paragdesai
Date Posted: 12/Mar/2011 at 10:17am
Agreed Subuji. I saw people waiting for delayed delivery of Whirlpool's Aviator AC Model though competitors models were readily available. Same thing is also true for some Hitachi AC models. This is also true for some SONY TV models. So now brand is playing part on purchasing decision despite lot of players around. Among listed consumers Whirlpool is looking strongest for future growth in variety of products with innovation but at CMP it's a good buy or not is debatable. ------------- Luck is what happens when preparation meets opportunity .... |
Posted By: vaib
Date Posted: 12/Mar/2011 at 11:18am
| In Indian markets pricing can't be denied as an factor. Its ultimately about where would growth would come in and not if few people prefer a certain brand. Samsung started giving decent phones for 6-9k which nokia was charging 16-20k, samsung is suddenly a hit even before android came to market. Before that samsung was considered a 3rd class phone. I would never buy a whirlpool fridge if same thing is available with any other respected brand with cheaper valuation. See variation of margins with hitachi, better to see numbers than just talking. |
Posted By: subu76
Date Posted: 13/Mar/2011 at 12:23pm
Hi Vaib,
You have a point....but i'd like to point out that Pricing power and brands are two different aspects (though related)..Also, target segment of brands cannot be divorced from the discussion
Commodities are ones where even a minor price difference would cause one to switch.
Hitachi reduced it's prices to enter smaller towns with considerable success but i can bet it's prices are still much above competition.
Needless to say brands play a much smaller role in the white goods segment because true differentiation is tough but I'd argue it does play a role.
I remember many years back Onida's "Neighbours envy and owner pride" ads lead to a surge in sales though they did not really have anything special in terms of offerings......
It's hard to find great moat brands....
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Posted By: manish_okhade
Date Posted: 13/Mar/2011 at 12:57pm
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What i mean here any kind of moat for any player can not be sustainable. One has to reinvent the branding consistantly to remain afloat in the market.
Instead look for businesses where sustainablility is somehow predictable. Well different opinions make the market
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Posted By: subu76
Date Posted: 13/Mar/2011 at 10:06pm
Agreed.....there is this constant need for running fast all the time..and on all fronts....anyone who rests for a while it a goner (like Whirlpool was a few years back) ..
It's not as easy as say collecting rents every month....
That is what makes these businesses not so attractive..that plus the fact that earnings can drop off should a slow down happen.....
Only an industry insider can have genuine edge over the market
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Posted By: ambore
Date Posted: 13/Mar/2011 at 1:45am
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It looks Panasonic has aggressive plans for India, they want to capture good part of AC market in India. First time time, I bought a two ton split from Panasonic which I think is value for money with good features. All my previous purchases are from whirlpool, Toshiba, Samsung and LG. However, I am not sure how Japanese companies like Hitachi and Panasonic get impacted due to recent earthquake/tsunami in Japan. ------------- Ramana Rao Ambore |
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