Centrum has projected a healthy first quarter for the consumer durable sector in financial year 2026-2027, with a 21% year-on-year value growth in sales across its coverage universe. The report attributes this surge to an intense summer season, a favorable base from the previous year, and strong demand for cooling products.
Segment-Wise Growth Projections
Room air conditioners are expected to see a 30% value growth, with volume expansion contributing 18-20% due to the heatwave and price hikes adding another 8-10%. Washing machines and televisions are anticipated to grow in early double digits, supported by a 5-7% price increase. However, the refrigerator segment underperformed and faced visible growth constraints.
The cables and wires segment, along with air conditioners, is projected to experience exceptionally high value growth of over 30%. The report states, "Q1FY27 is likely to be a seasonally healthy quarter for Consumer Durable sector with our coverage universe posting 21% YoY value growth in sales."
Financial Performance and Margin Outlook
On the financial front, the sector shows signs of recovery despite operational challenges. The EBITDA margin is expected to rise by 10 basis points year-on-year to 9.4%, compared to a 100 basis point decline in the base quarter. Profit after tax is likely to grow 22% year-on-year to Rs 29 billion, against an 11% decline in the base quarter.
However, pricing pressures persist due to high commodity costs for copper, aluminum, PVC, and resins. The depreciation of the rupee, import delays, higher ocean freight, and rising petrol and diesel prices further weigh on manufacturers.
Demand Trends and Base Effect
The demand driven by summer heat picked up significantly from mid-April and remained robust through May before tapering in June. The favorable base from the previous year, when widespread rains restricted sector growth to just 1% in Q1FY26, amplifies the current growth figures. The report notes, "For Q1FY27, we expect our coverage universe to post 21% YoY sales growth at Rs 461 billion (on a favourable base of 1% growth)."
Overall, the consumer durable sector is poised for strong growth in Q1FY27, led by cables, wires, and air conditioners, despite ongoing margin pressures from raw material costs and logistics challenges.
