Consumer Durables Q4 preview: Muted quarter; consumer durable segment to post 11 bps margin expansion
Along similar lines, JM Financial is bullish on the sector from a medium-to-long term perspective given macro tailwinds, low penetration in some categories, and category expansion opportunities.
For the consumer durable sector, brokerages sense a muted Q4 amid slight improvement in demand during the review period led by seasonal product categories, including fans, coolers and ACs. Brokerage firm Nirmal Bang sees the demand push for cooling products to be driven by the Southern markets.
JM Financial, on the other hand, sees aggregate revenue growth of 11 per cent on year and EBITDA growth of 3 per cent on year for its coverage universe. Accordingly, it expects net profitability to grow substantially for V-Guard and RR Kabel but fall sharply in the case of Bajaj Electricals and Crompton Consumer ((-32% /- 27%YoY respectively)
For the stocks under its coverage, Nirmal Bang expects top line growth of 19.6 per cent with a flattish Ebitda margin movement, a 21 bps fall YoY. Category-wise, within the consumer durable segment, the brokerage expects a topline growth of 28.7 per cent on year, led mainly by the company’s mobile category and room AC players.
In the consumer electrical segment, the brokerage sees a topline growth of 10.3 per cent on year. The brokerage maintains that healthy growth in wires and cables is likely to be offset by tepid growth in consumer lighting. JM Financial stated that pricing erosion continued in the segment during the quarter, a 15-20 per cent decline on year.
On the margin front, both the segments i.e. consumer durable and consumer electrical are seen to come out differently.
Outlook:
The industry as a whole is bullish on the demand recovery expected down the line. Along similar lines, JM Financial is bullish on the sector from a medium-to-long term perspective given macro tailwinds, low penetration in some categories, and category expansion opportunities. Likewise, its top picks are Bajaj Electricals (BEL), RR Kabel and Cello World. Key risks for the sector, however, are delayed recovery as well as sharp spike in commodity prices.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Gold and Silver rate today (May 14, 2024): Precious metals trade in green; yellow metal above Rs 72,000 once again, white metal near Rs 85,350
RCB vs CSK IPL 2024 Ticket Booking Online: Where and how to buy RCB vs CSK tickets online - Check IPL Match 68 ticket price, other details
SIP Returns: How Rs 3,000, 5,000, and Rs 10,000 SIPs can help you build retirement corpus of Rs 1.06 cr, Rs 1.77 cr, and Rs 3.53 cr
Women loco pilots speak about their struggle; many men have to be informed even for 'washroom break' in a moving train
Bandhan Bank Q4 FY24 Results Preview: PAT, interest income likely to grow in almost double digits; asset quality may improve
05:27 PM IST