White Goods- Muted Earnings, Stock Price Performance Over FY20-23; Model Recovery In FY24-26: ICICI Securities

ICICI Securities Report

In our coverage universe of 11 white goods and durable companies, seven companies reported earnings decline in FY23 and eight reported earnings compound annual growth rate of less than 10% over FY20-23.

Lacklustre earnings growth impacted the stock price performance of white goods and durable companies, resulting in their underperformance vs the market.

We note issues like mounting inflationary pressure impacted volumes, steep rise in commodity prices impacted margins, and revival of unorganised / smaller sectors impacted earnings growth.

However, we believe earnings CAGR over FY23-26 could be materially better than that over FY20-23 led by a revival in volumes and an improvement in margins post correction in commodity prices.

We believe a sustained earnings recovery could act as the key catalyst for the stock price performance of the sector companies.

Our top pick: Havells India.

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