Margin pressure for consumer electrical companies to continue in Q4

Volumes key as costs rise and firms refrain from hiking prices of products

With raw material prices rising sequentially in Q4 FY23, margins of fast moving electrical goods (FMEG) companies could witness pressure as they refrain from hiking prices and demand remains soft. Transition to a new regulatory regime—fans moved to new BEE standards from January 1—poses additional risk for firms. Business depends on volume trends in summer for key sub-segments, which account for a significant chunk of the sector’s overall sales pie.

“Post strong pent-up demand over April-May 2022, fast-moving electrical goods space excluding cable and wires remains soft to date due to an inflationary environment, lower spend on discretionary goods, and