Consumer durables demand mixed; prefer LG, Polycab India: Motilal Oswal

After a slow start during Ganesh Chaturthi, demand picked up in Navratri, with consumer durables sales growing 25-30% YoY, notes Motilal Oswal Wealth Management Research Desk.

Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion. Motilal Oswal Wealth Management Research Desk.  India's consumer durables market is seeing a mixed festive-season recovery, with premiumisation and weather-led demand supporting select categories, while higher prices continue to weigh on replacement purchases. After a slow start during Ganesh Chaturthi and Pitru Paksha, demand picked up with the onset of Navratri, with sales growing 25–30 per cent YoY. However, the improvement remains concentrated in a few categories, suggesting that the broader recovery in discretionary spending is still gradual. Air conditioners have witnessed a sharp rebound, with volumes rising over 60 per cent YoY in recent weeks, supported by higher temperatures. However, the sustainability of this growth remains uncertain given its dependence on weather conditions. Television demand has remained resilient, driven by a shift towards larger screens, with select premium segments reporting volume growth of 60–100 per cent YoY, albeit on a lower base. At the same time, panel shortages and limited chip availability have pushed television prices up by 22–25 per cent, putting pressure on affordability and prompting consumers to defer replacement purchases. The smartphone market reflects a similar divergence between volumes and value. Volumes are estimated to have declined by 10–15 per cent, while average selling prices have increased by 35–40 per cent, driven by repeated price hikes and a shift towards higher-value devices. This indicates that premiumisation is supporting value growth despite subdued underlying demand. Refrigerators and washing machines, meanwhile, continue to face weak demand as consumers increasingly opt to repair existing appliances rather than replace them. The exchange ratio at retail counters has declined to around 12 per cent, compared with nearly 30 per cent a year ago, highlighting the continued weakness in replacement-led purchases. Affordability remains a key concern across categories. Manufacturers are using zero-cost EMI schemes, cashback offers and dealer incentives to sustain festive sales. While these initiatives may support near-term conversions, a durable recovery will depend on consumers' willingness to spend on higher-value discretionary products. Product availability, retail reach, dealer support and after-sales service are also becoming increasingly important differentiators alongside pricing and product features. Beyond conventional appliances, kitchen chimneys and hobs are gaining traction, with the chimney market reportedly expanding by 40–50 per cent, supported by rising awareness and the adoption of modular kitchens. Energy-efficient BLDC fans are also benefiting from evolving consumer preferences, while premium appliances continue to find demand despite weakness in mass-market segments. Over the medium term, premiumisation, product innovation and penetration of underdeveloped appliance categories offer meaningful growth opportunities. However, the near-term outlook remains mixed, with a sustained recovery contingent on improving affordability and a revival in replacement demand, rather than continued reliance on weather-led sales, festive discounts and premium-category growth.   LG Electronics | TP - ₹2,075 LG Electronics is positioned to benefit from its diversified portfolio across home appliances, air solutions and home entertainment. Its premiumisation strategy, backward integration in compressors, expanding B2B presence across HVAC and information displays, and exports to 61 countries support its growth outlook. The upcoming Sri City facility should further strengthen localisation and operating scale. Management remains confident of sustaining approximately 20 per cent growth, with washing machines and televisions expected to drive performance in 2HFY27, while premiumisation and replacement demand should support refrigerators and air conditioners. We estimate revenue, EBITDA and PAT CAGRs of 13 per cent, 30 per cent and 32 per cent, respectively, over FY26–28, with a target price of ₹2,075. Polycab India | TP - ₹10,600 Polycab is also well placed to capitalise on healthy demand across infrastructure, real estate and industrial segments. In 2QFY27, revenue and EBITDA grew 53 per cent and 44 per cent YoY, respectively, supported by approximately 50 per cent growth in domestic cables and wires. Strong channel execution, favourable realisations and a healthy export pipeline provide further growth visibility. Its FMEG business recorded 2.2x revenue growth, led by solar inverters, while EBIT margin expanded by 9.6 percentage points to 10.1 per cent, marking its seventh consecutive profitable quarter. The company’s focus on growing 1.5x–2x faster than the industry, alongside opportunities in data centres and the upcoming extra-high-voltage plant expected in 1QFY28, offers additional growth levers. We estimate revenue, EBITDA and PAT CAGRs of 24 per cent, 24 per cent and 23 per cent, respectively, over FY26–28, with a target price of ₹10,600.