Increased input costs due to geopolitical conflict in West Asia and unseasonal rain in March negatively impacted volumes of consumer durables makers, particularly air conditioners, in Q4FY26, leading to projected declines in EBITDA and APAT despite revenue growth.
As the rupee has been on a downward slide and crossed 90 a dollar, consumer electronics firms are looking to raise prices of products ranging from air conditioners (ACs) to television panels up to 10 per cent.
The July-September quarter (Q2) performance of consumer electricals and durables major Havells India in 2025-26 (FY26) was broadly in line with Street estimates. While the top line was supported by robust growth in the wire and cable, switchgear, and lighting segments, the consumer durables segment restricted overall gains.
LG Electronics India made a dazzling market debut on Tuesday, ending 48 per cent higher than its issue price and surpassing its South Korean parent in market value.
Pantaloon Retail is eyeing the Rs 30,000 crore (Rs 300 billion) consumer durables retail market, excluding mobile phones and IT products.
While demand for consumer durables has been growing fast, investors need to be selective as stock valuations have risen even faster.
Consumer durable companies are stepping up investments in production and distribution to cash in on the demand the industry is witnessing. According to a recent report by research agency Crisil, the Rs 25,000-crore consumer durable industry is slated to grow at a rate of 17-18 per cent over the next five years, to touch Rs 60,000 crore.
According to a report by AdEx, a division of television viewership monitoring agency TAM Media, air-conditioners accounted for a cool 14 per cent share of the advertising on TV by consumer durables companies.
An eight to nine per cent depreciation of the rupee against the dollar in the last one month means companies have to pay more for components or products they import.
Unseasonal rains watered down the performance of consumer durables companies as temperatures cooled, impacting the sales of refrigerators and air conditioners (ACs) in the 2023-24 (FY24) April-June quarter. Centrum says in its report on the sector that the trade channel indicates a 25-30 per cent year-on-year (YoY) decline in sales of refrigerators and ACs in April and May due to restricted buying. "While some green shoots in demand were visible in June, overall growth for the quarter is likely to remain at a negative 10-12 per cent," observes the brokerage.
Fast-moving consumer goods (FMCG) companies are closely monitoring crude oil prices and considering low single-digit price increases, while consumer durables firms have already begun passing on significant price hikes to consumers due to rising input costs exacerbated by the West Asia conflict.
Analysts expect firms to shift focus to online platforms to boost sales in these Covid-19-impacted times.
GST will create a single, unified Indian market
Sales of apparel were a mixed bag this festive season while those of consumer durables saw an uptick with mobiles, laptops, and air conditioners being in demand. In apparel, Tier-2 and -3 markets did better for some brands, because these have been witnessing an uptick for the past 18-20 months compared to metros. "The past two weeks have been good, and we saw a 13 per cent increase in value sales, and volume sales have also been similar," Manish Kapoor, managing director (MD) and chief executive officer (CEO), Pepe Jeans
Consumer durable firms, including Haier, Whirlpool, Panasonic, Godrej Appliances and Daikin, are increasing prices of their products by up to 5 per cent following the withdrawal of excise duty sops, coupled with high input costs.
Firms also said the excise duty hike by two per cent will be passed on to consumers and it may hurt sales further.
It's all eyes on the consumer durables sector during the festival season after a weak Q1FY24 and Q2FY24 was impacted by an erratic monsoon. Traditionally, this period sees the highest number of purchases. Dealers and manufacturers are complaining about low business-to-consumer (B2C) off-take during the first half.
N Chandrasekaran, chairman of Tata Consumer Products (TCPL), stated that India continues to experience credible economic growth, driven by strong demographic fundamentals and accelerating digital public infrastructure, despite a fragmented global landscape.
The pharmaceutical and the consumer durables sectors, which depend on China for imports, have not been impacted yet due to unrest in China with people protesting against lockdowns. But the lockdown could have an impact on the supply of components used in consumer durables if it continues for the next fortnight. In the pharmaceutical industry, Indian players import 66-70 per cent of their bulk drug requirements from China.
The company's managing director R Subramanian told PTI in Chennai that the stores would hold products like laptops, printers, computers apart from mobile phones.
Consumer durable companies are witnessing a slowdown in sales of finance-linked products after banks and finance companies reduced their lending, fearing a sharp rise in defaults.
Consumer durables firms on Monday hailed Finance Ministry's proposal to reduce customs duty on flat panels to five per cent from 10 per cent, saying that the move will reduce LCD TV prices and boost demand.
Indian investors have seen their wealth erode by a staggering Rs 16.77 lakh crore over four trading sessions, as the markets faced deep losses driven by elevated crude oil prices, geopolitical tensions, persistent foreign fund outflows, and a record-low rupee.
The rupee's slide to a two-year low will impact consumer durables and electronics companies, as the import content in their products tends to be high
A delayed monsoon and soaring temperatures across the country are added near-term positives.
While e-commerce operations for these firms are small at the moment, it is slated to grow in the next 3 to 4 years.
Anticipation of weak sales this festive season due to deficient monsoon, especially outside big cities.
According to the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the estimated Rs 35,000 crore (Rs 350 billion) Indian consumer durables market, which has giants like LG, Sony, Videocon, Samsung and Panasonic, did not grow as expected, with air-conditioners being the biggest spoilsport.
The Boston Analytics Consumer Sentiment Index for August fell below the benchmark value of 100 since its inception, signalling a low-key festive season ahead.
The index of industrial production data released by the government revealed on Friday that the growth in the Rs 32,000 crore (Rs 320 billion) consumer durables was in the negative -- down 3 per cent as against 9 per cent in October 2007. On the other hand, the durables sector had contributed to the industrial output rebound in the months of July (12.3 per cent ) and September (13.1 per cent).
Top carmakers, including Maruti Suzuki India, Hyundai and Honda, are expecting a spike in their sales following the implementation of 7th Pay Commission recommendations.
Videocon, Philips and Godrej are reworking strategy to grow their small appliance business. Last year, their focus was on high-end products. This shift to the low-end segment, they believe, will help them maintain their sales growth from Tier-II & Tier-III cities, while simultaneously helping them penetrate into rural areas. Home appliances account for over Rs 50 billion of the Rs 320 billion consumer durable business and is growing at a rate of 10-12 per cent.
Even as India is mulling legislation to make energy-efficient air conditioners and refrigerators, consumer durable manufacturers are already thinking beyond that.
Banks no more entertain borrowers who need a loan to buy consumer durables. Credit cards are being encouraged, instead.
November IIP data show a fall of over 20%, led by automobiles, gems & jewellery and home appliances; turnaround seen as unlikely.
IMD expects day temperatures to remain above-normal in select regions across the country between March and May 2021.
But the fear of less-than-normal rain hitting rural demand continues to haunt the industry.
The industry is expecting double-digit growth on a year-on-year basis, helped by a possible price correction after softening of raw material inputs and factors such as positive sentiments, pent up demand and improving economic conditions. Besides, a shift in consumer behaviour from price consciousness towards technologically advanced premium products with quality, value proposition and safety aspects leading to a rise in demand for home automation products is making the industry upbeat. With the government's production linked incentive (PLI) scheme for white goods, which has witnessed a committed investment of Rs 4,614 crore, in place, many manufacturers are gearing up to make the most out of the opportunity as well as take steps towards reducing their dependency on imports and make products more affordable.
This festive season is expected to be a happy one for consumer durables companies, with most expecting to clock a sales growth of 40 per cent - double the amount achieved last year.
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