NEW DELHI: Driven by consumer electronics, India’s consumer durables sector is set to clock a 20% growth in revenue this fiscal after a flattish run last fiscal, according to a report.
The report by Crisil Ratings suggests that electrical appliances makers that contribute to 35% of the sector revenues are expected to grow twice as fast as white goods makers, which contribute to 65% of the sector’s total revenues. White goods include washing machines, televisions, refrigerator and air conditioners while consumer electronics include fans, small kitchen and cooking appliances, and lighting products among others.
The sector had clocked Rs 2 lakh crore revenue last fiscal. Gautam Shahi, Director, Crisil Ratings, says the growth momentum is expected to accelerate this fiscal on positive sentiment, uptrading and higher realisations. “Consumer electricals will continue to outshine with 23-24% revenue growth expected this fiscal, compared with 14-15% for white goods, riding on factors such as shorter replacement cycle, necessity, and smaller ticket size.”
Despite higher revenues, the sector’s margins are expected to moderate as the prices of key commodities such as copper, aluminium, and polypropylene have stabilised, and are 30% higher than the average of the past two fiscals, according to Crisil’s analysis of 15 companies accounting for 45% of the sector’s revenue. Consumer electrical makers have hiked prices by 8-10% this fiscal, much more than the average 3-4% by white goods makers. Operating profitability of white goods makers is seen moderating at 6-7% compared with 10-11% for consumer electrical makers.