Consumer durable stocks to heat up D-Street as summer season picks pace: Analysts

As the heat wave perks up, the demand for summer products is also expected to rise. This, in turn, is expected to heat up shares of consumer durables or white good manufacturers on Dalal Street, extending their current bull run, market experts have opined.

So far this year, shares of Voltas, Bluestar, Amber Enterprises, Whirpool of India, and Symphony have rallied up to 50 percent, outperforming benchmark Nifty 50 index that gained 2 percent during the same period.

Going ahead, YES Securities analysts foresee Whirlpool India, Symphony, Havells India, and Amber Enterprises to potentially surge by up to 11 percent in the near term. This bullish outlook is attributed to the increasing demand for summer essentials such as air-coolers, refrigerators, air-conditioners (RAC), and fans.

“Our checks suggest that there has been positive feedback about the summer season. Dealers have been enthused with strong initial demand and expect season to end on strong note. We remain positive on the season and expect summer products sales to be better than expectation. Our preferred picks from the space would be Symphony, Voltas, Crompton, and Orient electric,” the brokerage firm said.

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Demand for white goods rises in South as summer lands early

According to the Indian Meteorological Department (IMD), the April-June period is likely to experience above-normal temperatures across most parts of India, except for certain areas in the east and northeast. Southern India is already experiencing intense heat waves, with temperatures exceeding 40 degrees celsius.

The early onset of summer in the southern region has led to a significant increase in demand for RAC products, particularly in Karnataka and Andhra Pradesh, where sales have seen a remarkable surge of 200-250 percent year-on-year and 30-40 percent year-on-year in the March-ended quarter (Q4FY24), according to analysts at JM Financial.

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PLI, moderating commodity costs of RACs to aid affordability

Having said that, RAC prices have trimmed down in the last one year due to increase in localisation, production linked incentives (PLI), and favourable commodity prices. On average, copper and aluminum prices for March have decreased 5 percent each on a monthly basis.

According to channel checks by JM Financial, Voltas sold 2 million RACs, Bluestar sold 1-1.1 million RAC units, and Haier sold 0.7-0.9 million units in FY24. The brokerage firm expects RAC industry to grow 13-15 percent compounded annual growth rate (CAGR) for the next 2-3 years.

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“The growth in RAC industry is likely to be backed by affordability due to increase in localisation and PLI. Low penetration coupled with strong summer visibility is also likely to help the industry grow. Other factors driving the industry would be increasing disposable incomes, ease of finance, and shift towards premiumisation,” analysts added.

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