Consumer durables growth muted as demand slows, margins shrink: HDFC Securities

New Delhi [India], April 10 (ANI): The Indian consumer durables sector is expected to remain under near-term pressure amid weak demand trends and rising input costs, even as select categories and structural drivers support a gradual recovery over the medium to long term, according to a report by HDFC Securities.

In the short term, demand conditions remain challenging across key segments. "Demand remained subdued across most consumer durables categories in the quarter," the report noted, citing factors such as unseasonal weather, high base effects, and delayed seasonal demand. Margin pressures are also intensifying due to elevated commodity prices, with the sector expected to post modest revenue growth but declining profitability.

However, the report highlights pockets of resilience, including televisions driven by event-led demand and kitchen appliances supported by rising adoption trends.

"The television segment should deliver strong growth, led by World Cup-driven demand, and kitchen appliances are likely to post healthy growth, led by rising induction cooktop demand amid gas shortages," HDFC Securities noted.

Over the longer term, structural factors such as premiumisation, increased electrification, and improved penetration levels are expected to aid recovery.

The report added that the summer season has begun on a weak note, marked by delayed demand in the south and weather-related disruptions in the north. In addition, a moderation in real estate sales has further weighed on the demand outlook. Rising commodity prices have led to renewed input cost inflation, posing downside risks to margins, the brokerage noted.

Despite this, visibility on a sustained demand rebound remains limited. "The consumer durables sector continues to operate in a subdued demand environment, with no meaningful recovery in the past quarters and limited visibility on a sustained pick-up," the report added.

Overall, while near-term headwinds from weak demand and cost inflation persist, the sector's long-term outlook remains constructive, contingent on demand normalisation and easing input cost pressures. (ANI)

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