Daikin India: Strong growth aspirations

16 Nov 2023 , 11:01 AM

Increasing focus on more affordable products and deeper distribution in regional cities places it well to grow market share. This is backed by a large (2.5m units) well spread manufacturing base and higher backward integration (largest commitment under PLI) to support not just India market but also for exports. Strong India operation is a key growth pillar for Daikin Global, visible also in Kanwal Jeet Jawa (Head India Business) being Member of Board at Daikin Global.

Strong performance over 2003-22; and in H1FY24

Over the past 13 years, Daikin India has grown revenue at 27% CAGR to report revenue of ~Rs. 88 billion in FY23. This is spread across RAC (70% share), VRF systems (20%) and projects (10%) businesses and caters to both India market as well as exports in nearby countries. H1FY24 performance has been healthy as well with growth of 28% as it continues to focus on expanding distribution for a more affordable range of products versus its earlier offerings. The more intense competition seen in domestic RAC market has also seen steadily rising aggressiveness from Daikin.

Focus on India operations key to parent growth plans

A strong India manufacturing base forms one of the three pillars for Daikin’s Fusion 25 program and Daikin had the largest commitment under PLI (Rs. 5.4 billion across most sub categories) versus other players. The Company recently commissioned its third manufacturing plant in Sri City (South India) and now has India based capacity of 2.5m units of RAC. Q2FY24 result commentary suggests strong focus on larger sales and distribution network with more emphasis on new sales routes in regional cities. Strong R&D, new product development and expanding exports are the other focus areas for Daikin.