Consumer Durables, Electricals - Material Margin Improves On Stable Commodity Cost: Yes Securities

Yes Securities Report

Material prices have been stable post Q4 FY22:

Prices of key commodities such as copper and aluminum have been trending lower post its high that were observed in Q4 FY22. From its high in Q4 FY22, Copper prices are lower by 5.7%, while aluminum prices are lower by 23.7% in Q2 FY24.

On the other hand, global freight index has collapsed by 88%. Stability in key commodity prices like copper and aluminum has brought much needed relief the company as far as material prices are concerned.

Gross margin of consumer durables/electrical companies under coverage has seen improvement of ~350 basis points in Q2 FY24 on its average basis after hitting low of 27.7% in Q4 FY22 when the commodity prices were at peak.

Current average gross margins of 31.2% are still lower than the peak gross margin of 33% which companies used to enjoy when commodity prices were stable.

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