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4QFY25 review: Positive surprise on margins

The W&C industry closed FY2025 on a strong note, aided by channel restocking and a pick-up in government capex execution. Within ECD, an early summer aided air cooler sales, but failed to drive growth in fans. Lighting remained impacted by price erosion, whereas kitchen appliances showed some signs of revival. Aggressive channel stocking led to robust growth in Room ACs. Margins surprised positively across the board. Eureka Forbes (BUY), Crompton Consumer (BUY) and Whirlpool (ADD) remain our preferred picks.

Cables & wires segment saw robust growth with margin expansion in 4Q

The wires & cables industry (listed players) closed FY2025 on a strong note by reporting 23.5% yoy revenue growth, with margins largely steady yoy (aided by a gradual increase in commodity prices). KEI (+34% yoy) and Apar (+30%) continued to lead on topline growth, while RR Kabel (+28%) staged a good comeback. Polycab’s W&C growth (+22%) was impacted due to the rollover of a large export order into 1QFY26. In FY2025, KEI was a standout performer, with robust 24%/28% yoy revenue/EBIT growth. In terms of capacity, (1) Havells recently announced plans to further invest Rs3.5 bn in its Alwar brownfield capacity, (2) RR Kabel unveiled plans to invest Rs12 bn to expand capacity by 70% over FY2025-28E and (3) Apar is looking to invest Rs8 bn in a new facility, which can enable it to double its current cables topline to Rs100 bn.

ECD—an early summer benefited air coolers, but failed to drive sales of fans

Within ECD, Symphony (+47%), and Polycab (+33%) led the pack, whereas Crompton (+5.7%) lagged. In fans, Orient/Bajaj/Crompton saw HSD/LSD/flat growth in 4Q. Eureka reported 10.9% yoy growth in continuing business, led by high-teens product growth. Kitchen appliances saw mixed trends—Butterfly (+10.8% yoy) and TTK’s (+4.3%) performance improved, whereas Elica (declined 6%) and Sunflame (down 24%) remained under pressure (particularly impacted by a slowdown in the CSD channel). TTK noted that after several quarters of slowdown, it has finally seen some green shoots in underlying demand. In FY2025, (1) Havells/Orient/Crompton/Bajaj reported DD/HSD/MSD/LSD growth in fans and (2) Crompton/Orient registered +20%/+19% ECD EBIT growth, versus +2.6% of Havells and +7.6% of Bajaj. Crompton announced its entry into the fast-growing solar rooftop market.

Large appliances—channel stocking drives robust growth in room ACs

An early summer and fear of compressor shortages drove channel stocking in room ACs in 4Q; Blue Star estimated 1.5-2 mn units of excess inventory in the market, as of end-4Q. Lloyd reported 39.5% growth (partly aided by a soft base), while Voltas (UCP)/Blue Star (UP) posted 17%/14.7% growth. Whirlpool continued to gain market share across segments and reported 15.6% topline growth. Margins surprised across the board, led by Voltas (DD EBIT margin, partly aided by higher other income) and Lloyd (6.2%, +350 bps yoy). On a fullyear basis, Hitachi/Lloyd stole the show with 45%/35% topline growth and both breaking even at the EBIT level.

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