Q3 Result Preview: Consumer Durable manufacturers have seen mixed fortunes for their sales volumes during the October-December quarter.
While the Cable and wire manufacturers continue to see good demand helped by government capex, housing and real estate demand and even private capex picking some pace, the situation has not been so conducive for rest of the pack. Overall demand scenario remined weak and the festival season sales for appliances and durables though positive however remained below expectations, say analysts. The electrical gadgets, fans and durables generally saw a weak trend. The air-conditioning companies nevertheless are likely to see volume growth, which is expected to be helped by stocking ahead of the season say analysts.
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In this back drop as Polycab , Finolex, Havells (Cable and wire segment) are likely to see volume and earning momentum continue, caution prevails on smaller appliances and Durables manufacturers. Air Conditioner manufacturers as Voltas, Blue Star and Lloyds (Havells) may see volume momentum.
Since there was stable commodity prices, gross margins may see some improvement for all manufacturers. Also currently, companies are focusing on volumes (operating leverage) to improve margins, said analysts.
In Q3, consumer sentiment remained weak, and the B2B portfolio continued to grow higher than the B2C portfolio’ said analysts at PhillipCapital India Research in their preview report. In AC, there was channel stocking ahead of season. Revenue and earnings y-o-y growth should be 12% and 38% respectively for companies under PhillipCapital Research universe. Revenues and Earnings may growth at four-year CAGR at 14% and 13% respectively versus 3QFY20, they added. They expect Blue Star, Voltas and V-Guard to outperform and Orient Electric to underperform in Q3.
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Analysts at BNP Paribas in their Q3FY24 preview said that “a mixed bag expected with trends similar to 2Q. Aggregate 2QFY24 revenue for the sector rose 12% y-y. However, the underlying trends were mixed. While Cable and Wire firms saw strong volume growth y-y, B2C firms continued to see softness in consumer demand, along with price erosion in the lighting segment and a shift in festive demand.
Voltas Havells remains amongst top picks of BNP Paribas.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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Published: 15 Jan 2024, 06:14 PM IST