Consumer Durables index at new high; Voltas, Crompton, Polycab up over 5%

Havells India reported healthy Q3 performance on the back of strong festive demand, market share gains and increased penetration in smaller towns

Shares of consumer durables companies, including electronics products and household appliances, were on a roll at the bourses on Thursday after Havells India reported a strong set of numbers for the quarter ended December 2020 (Q3FY21) on the back of strong festive demand, market share gains and increased penetration in smaller towns.

Havells India, Polycab India, V-Guard Industries, Orient Electric, Voltas, Crompton Greaves Consumer Electricals and Whirlpool of India were up between 5 per cent and 10 per cent on the BSE on Thursday. Out of the top 10 gainers from the S&P BSE500 index, six stocks are from these sectors on the BSE, at 10:31 am.

The S&P BSE Consumer Durable index, the top gainer among sectoral indices, was up 2.4 per cent, as compared to 0.55 per cent rise in the S&P BSE Sensex. The consumer durable index hit a record high of 31,775 in intra-day trade today. The index zoomed 90 per cent from its low of 16,699 touched on March 24, 2020.

Among individual stocks, Havells India surged 10 per cent to Rs 1,122, also its record high on the BSE, after the company’s standalone net profit for Q3FY21 jumped 75 per cent year on year (YoY) at Rs 349 crore, on the back of strong revenue growth.

The company’s revenue during the quarter increased by 40 per cent YoY at Rs 3,166 crore. Ebitda (earnings before interest, taxes, depreciation, and amortization) margins expanded by 420 basis points (bps) at 16.0 per cent from 11.8 per cent in the corresponding quarter of previous fiscal.

The management said the encouraging business performance with secular growth across divisions and regions was led by improvement in consumer sentiment, festive season and reduction in Covid-19 cases and increased penetration in smaller towns and a higher rural reach. The supply chain disruption faced by suppliers with high import dependence has further supported market share gains, it said.

Various companies across the consumer durables and consumer electricals sectors indicated price hikes in between 1 Jan’21 and 15 Jan’21. Hence, most channel partners resorted to pre-buying towards the end of December 2020. We expect a large part of the price hike benefits to accrue in January-March quarter (Q4FY21) for these brands, analysts at Motilal Oswal Securities said.

Even as downtrading was expected due to slackness in the economy, the opposite has happened with an increase in an offtake of premium products across categories. This can be attributed to higher wear-and-tear of existing components/machines owing to their higher use during the lockdown, it said.