Increasing disposable income, cheap financing and lower running costs for ACs are expected to further drive demand for air conditioners in India, in our view. We took a deep dive into the room AC market in urban India and discovered that AC penetration remains very low at 10%. There are 9.1m/24m households with washing machines/refrigerators but no ACs. Thus, as more households install ACs going forward, demand could reach 18-48m (which is equal to 3-8 years of annual industry AC sales) and penetration levels could increase significantly from current low levels of 10% in urban India