Gadkari's Truck AC Mandate Sends AC Maker Stocks Higher, Subros Hits Upper Circuit

On Tuesday, while the broader mood on Dalal Street was weak, shares of air conditioner makers moved sharply higher. Subros, which makes automotive cooling systems, gained about 20 per cent and hit its upper circuit. Amber Enterprises rose roughly 10 per cent. Blue Star and Johnson Hitachi each climbed around 4 per cent. Voltas went the other way: by about 2:30 PM it was trading in the red, with investors selling into its rise.

The trigger came a day earlier. On Monday, Road Transport and Highways Minister Nitin Gadkari spoke at an event organised by Mahindra Logistics and said that all trucks made in India will need air-conditioned driver compartments beginning in 2025. He told the audience he had signed the file making the requirement mandatory shortly before arriving at the event.

Market analysts read the announcement as a new business line for companies that already make air conditioners. Avinash Gorakshkar, Head of Research at Profitmart Securities, said the rally reflects short-term positive sentiment. His reasoning was that truck makers will not be able to develop cabin air conditioning themselves, so the market expects the work to be outsourced to the leading AC manufacturers, opening an additional avenue for white goods companies.

Anuj Gupta, Vice President of Research at IIFL Securities, framed the benefit in terms of company finances. A new line of business, he said, should strengthen balance sheets and improve margins. But he cautioned that none of it arrives overnight. The change is expected to be implemented by 2025, and he noted that this is not a deadline every vehicle maker is bound to meet. Ashok Leyland has already announced it will bring out trucks with air-conditioned driver cabins, and Gupta expects other major auto companies to follow. His estimate was that the extra revenue would emerge over the next two to three years.

Asked which stocks long-term investors should consider, Gupta named Voltas, Amber Enterprises, Johnson Hitachi and Blue Star. His reasoning was that these are market leaders, and that auto companies are likely to pick their AC suppliers based on performance and market standing. That recommendation, like Gorakshkar's reading of the rally, is the view of individual analysts and not of Mint, which advised investors to consult certified experts before acting.

So the day's picture is mixed in a useful way. Four AC-linked stocks rose, one of them to its upper limit, yet Voltas, named as a long-term pick, was falling. What to watch now is how quickly truck makers beyond Ashok Leyland announce air-conditioned cabins, and which AC companies they choose as suppliers over the next two to three years.