Consumer Durables Q1 Results Preview - Healthy Demand, Driven By Season: Prabhudas Lilladher

Prabhudas Lilladher Report

Consumer durables sector experienced healthy demand during Q1 FY25 led by room AC/cooler/fan with the severe summer driving secondary as well as primary sales. Within the RAC segment, brands have increased prices by 2- 3% and also benefited from the low inventory levels in channels, particularly favoring Voltas and Lloyd according to our channel checks.

Fan companies have also increased prices by ~5% in the last couple of months. In Q1 FY25, the wires and cable segment continued to outperform, driven by strong cable demand. However, the wire segment saw slower growth due to a high base, higher copper and aluminum prices, and increased realisations.

We expect our consumer durables universe to register sales/Ebitda/profit after tax growth of 14.5%/21.0%/20.6% YoY in Q1 FY25. Furthermore, we anticipate Polycab, Havells and Voltas to outperform, while Bajaj Electricals may underperform in sales. In terms of profitability, Havells and Voltas are expected to outperform.

We continue our positive view on W&C companies with a healthy growth and return profile and continuously expanding opportunity market. RR Kabel continues to be our top pick, followed by Polycab.

UCP segment witnessed strong growth during the summer season led by increased demand. However, considering the upcoming weak season and the higher valuation for Voltas, we downgrade the stock to Reduce from Hold.

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