Every year, like clockwork, a certain section of the stock market gets ready for its moment in the sun, literally. As March rolls into April and temperatures climb, investors typically bet big on “summer stocks”: makers of air conditioners, soft drinks, ice creams, fans and even amusement parks. The logic is simple: when the country sweats, these companies rake in business. But the summer of 2025 hasn’t followed the script. Unseasonal rainfall pushed the heatwave window further down the calendar. The result? Stocks that were expected to ride a seasonal wave have ended up cooling off.
Let’s look at the numbers first. Shares of major AC and air cooler companies have had a tepid showing over the past month. Blue Star is down 10 per cent. Dixon Technologies, a major electronic manufacturing services player, has dropped 11 per cent. Havells India, Orient Electric and Johnson Controls are down about 4 per cent each. Amber Enterprises and Voltas are flat. Even contract manufacturers, who benefit from OEM demand, haven’t escaped the slowdown. Air conditioner (AC) industry, which is seasonal in nature, sells about 15 million units annually, with a lion’s share happening in and around summer.
Blue Star, in its recent earnings call, summed up the mood: “The weather forecasts have predicted a strong summer, and we are hopeful that the momentum for the room AC business will pick up in May and June; even though, the growth in April was not in line with expectations.”
Havells management, too, admitted the lag in its con-call. “There is no doubt that there has been a delayed summer this time, which is effective in the growth of the southern markets where summers come early. Even in the northern parts of the country, the summer has been delayed.” Centrum Broking marginally cut its FY26E-27E EPS for Havells by 3-4 per cent, citing near-term growth concerns due to weak secondary sales of cooling products in March-April due to delayed summer.
If cold drinks and ice creams are the go-to for every Indian summer, their makers didn’t quite sizzle either. In fact, the industry was expecting a sales surge of around 25-30 per cent year on year between March and May, before summer played spoilsport.
Shares of Varun Beverages, bottler for PepsiCo, are down 9 per cent. Vadilal Industries has tanked 16 per cent, partly due to a promoter family conflict. When summer is delayed or disrupted by early rains, demand for cold drinks and ice creams often takes a hit, since peak sales depend on sustained high temperatures and predictable heatwaves. Heritage Foods and Hatsun Agro have stayed flat.
The commentary from Varun Beverages offered a slightly more long-term view: “We cannot plan on month to month because each month is different and weather patterns vary… we can grow in double digit, and this is what we are expecting.” Despite that confidence, the early weeks of summer haven’t popped open as expected.
Even amusement parks, often packed during school vacations and heatwaves, haven’t drawn investor excitement. Wonderla Holidays is down 6 per cent in the last one month. Nicco Parks has remained flat. These are businesses that rely on footfall, especially in April-June. If the heat doesn’t peak at the right time, neither does traffic. With weather disruptions and heat arriving in fits and starts, it’s no surprise these counters have underperformed. Wonderla in Q4 saw a slight degrowth in revenue and footfall because of unpredictable market conditions, and what the management termed as “temporary softening of discretionary spend”.
Elsewhere, the delayed summer has also led to an unintended pile-up of inventory. According to Nirmal Bang Institutional Equities, Orient Electric, which makes fans and air coolers, has seen a rise in working capital due to this. This suggests that while companies geared up for a scorching season, the actual demand didn’t show up in time.
Will valuations be hot?
The bet for all now shifts to June. If the heat sticks around, some of these players could make up lost ground. But valuations still need to support that story. Cooling system makers such as Blue Star, Johnson Control and Voltas trade at 34-37 times trailing EV/EBITDA. Household appliance manufacturers, including those operating on contracts, such as Amber (30x EV/EBITDA), Havells (44x) and Dixon (59x) are not cheap by any yardstick. Soft drink maker Varun Beverages trades at 34x. The cheapest of the summer stocks lot are amusement parks (Wonderla 25x and Nicco 22x) and ice-cream makers such as Vadilal (17x).
It’s tempting to treat seasonality as a trading strategy. But as this year shows, nature doesn’t follow market forecasts. A summer stock rally may still come, but it’s arriving late. For now, investors who loaded up early are sitting on melting ice-cream cones. Whether they drip further or refreeze into value depends entirely on how hot June turns out to be.
Published on May 31, 2025
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