🧵 At a Glance
Johnson Controls-Hitachi Air Conditioning India Ltd makes air conditioners that cool homes faster than its stock heats up… in valuation only. With profits going on and off like an old window AC, ROE struggling to break double digits, and sales growth slower than ceiling fan rotation, the company is banking on a summer miracle. P/E 79? Bro, even the compressor has less pressure.
1. 🪝 Hook: AC Company Running Hot on P/E, Cold on Profits
Imagine selling 1000s of ACs during the hottest summer in Indian history—and still delivering a 5% OPM. Now imagine paying ₹1770 per share for that.
Welcome to JCHAC.
Cool machines, lukewarm business, and a stock chart with more mood swings than Delhi weather.
2. 🧪 WTF Do They Even Do?
Hitachi India isn’t just an AC brand—it’s a joint venture between Johnson Controls and Hitachi Japan.
They manufacture and sell:
- 🧊 Room ACs (RAC)
- 🌇 VRF/VRV Systems (for big buildings)
- 🏢 Chillers, Packaged ACs
- 🥶 Commercial Refrigerators
- 🧼 Aqua-guards too (what’s next—washing machines?)
Fun Fact: Most of their consumer base buys for brand value, not price competitiveness. But can the brand hold when Voltas and Blue Star are eating into everything?
3. 💰 Financials Overview – Profit, Margins, ROE, Growth
| Metric | Value |
|---|---|
| FY25 Sales | ₹2,756 Cr |
| FY25 Net Profit | ₹59 Cr |
| OPM | 5% (meh) |
| ROE | 9.96% |
| ROCE | 13.83% |
| 5Y Sales CAGR | 5% ❌ |
| 5Y PAT CAGR | -6% ❌ |
| TTM PAT Growth | 226% (only looks good because of low base) |
🔎 You’re paying premium for a company that had negative profits for two straight years (FY23, FY24). Now it’s back in green… but can it sustain?
4. 📊 Valuation – Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹1,771 |
| Book Value | ₹236 |
| P/B | 7.53x ❌ |
| P/E (TTM) | 79x 🤯 |
Even Voltas and Blue Star, with better growth, better market share, and stronger financials, trade cheaper.
🎯 Fair Value Range: ₹900–₹1,250
Assuming sustainable ₹60–₹70 Cr profit and 15–20x normalized P/E (industry median)
5. 🍲 What’s Cooking – Any Drama, News, Triggers?
✅ Declared ₹36 interim dividend (yay, finally giving back!)
✅ Q4 FY25 profit rebounded to ₹56 Cr
⚠️ Working capital improvement: from 36 days to 23.5 days
🚨 But… 32.3% of promoter shares pledged
🔎 New sustainability & ESG disclosures (BRSR) filed
⚙️ Back-to-back losses in FY23 and FY24 have eroded public confidence
So while FY25 looks “cool”, we need 2–3 consistent summers before investors stop sweating.
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Equity Capital | ₹27 Cr |
| Reserves | ₹614 Cr |
| Total Liabilities | ₹1,799 Cr |
| Borrowings | ₹42 Cr |
| Fixed Assets | ₹334 Cr |
| Cash & Other Assets | ₹1,457 Cr |
📉 Debt is low, but liabilities are largely current payables. Nothing alarming—yet nothing dreamy either.
7. 🧮 Cash Flow – Sab Number Game Hai
| Year | CFO | FCF | Net Cash |
|---|---|---|---|
| FY24 | ₹254 Cr | Positive | ₹50 Cr inflow |
| FY25 | ₹83 Cr | Lower due to restocking | ₹66 Cr net inflow |
⚠️ Cash flow is erratic, like an AC with thermostat issues. Needs consistency.
8. 🔍 Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 9.96% ✅ (back in positive) |
| ROCE | 13.8% |
| OPM | 5% |
| Inventory Days | 146 |
| Cash Conversion Cycle | 42 Days ✅ |
| P/E | 79 ❌ |
| P/B | 7.5 ❌ |
➡️ Margins are improving, but valuation is from another planet.
➡️ Pledged promoter holding is a big red flag.
9. 💸 P&L Breakdown – Show Me the Money
| FY | Sales | EBITDA | Net Profit |
|---|---|---|---|
| FY22 | ₹2,159 Cr | ₹97 Cr | ₹16 Cr |
| FY23 | ₹2,384 Cr | ₹-18 Cr | ₹-82 Cr |
| FY24 | ₹1,919 Cr | ₹0 Cr | ₹-76 Cr |
| FY25 | ₹2,756 Cr | ₹135 Cr | ₹59 Cr ✅ |
They’re back to profitability after 2 years of bleeding. But EBITDA margin is just 4.8%. For context, Blue Star has 7.3%.
10. 🥊 Peer Comparison – Who Else in the Game?
| Company | P/E | OPM | ROE | PAT (Cr) | CMP / BV |
|---|---|---|---|---|---|
| Voltas | 55x | 6.4% | 13.3% | ₹823 Cr | 6.98x |
| Blue Star | 64x | 7.3% | 20.5% | ₹582 Cr | 12.27x |
| Amber Ent. | 101x | 7.4% | 11.2% | ₹243 Cr | 10.8x |
| Hitachi JCHAC | 79x | 5% | 9.96% | ₹60 Cr | 7.53x ❌ |
TL;DR: Premium valuation, lowest profit base. You decide.
11. 👨👩👧 Shareholding, Promoters, KMP
| Stakeholder | % (Mar 2025) |
|---|---|
| Promoters | 74.25% ✅ |
| FIIs | 1.23% |
| DIIs | 6.96% (falling steadily) ❌ |
| Public | 17.55% (increasing) ⚠️ |
🚩 Promoter Pledging: 32.3%
That’s massive. Combine that with falling DII confidence and flat performance = 👀
12. 🧠 EduInvesting Verdict™
Johnson Controls-Hitachi is the type of company you’d want to love—premium brand, cool products, strong parentage (Hitachi + Johnson). But the financials? Not so cool.
Bull case:
- Margin improvement continues
- Pledged shares get cleared
- AC demand boom sustains for 2–3 years
- They catch up to Voltas/Blue Star
Bear case:
- Pricing pressure from cheaper brands
- Lack of scale
- Still weak margins
- Promoters don’t resolve pledging
💰 Final Fair Value Range: ₹900–₹1,250
Based on normalized ₹60–₹70 Cr PAT, P/E of 15–20x, factoring in brand + revival optionality
✍️ Written by Prashant | 📅 July 3, 2025
Tags: Hitachi AC, Johnson Controls, consumer durables, RAC market, AC stock analysis, JCHAC valuation, white goods India, Voltas vs Hitachi, promoter pledging, high PE stocks, EduInvesting
