IGI Logo

Durables: 1QFY26E preview

Trends that we expect in 1QFY26E: (1) Healthy revenue growth in the W&C space, led by an acceleration in domestic volume growth, partly offset by a lower pricing tailwinds and weak exports; (2) revenue declines in cooling categories (air coolers/RACs/fans), impacted by a disrupted summer and a high base; and (3) continued momentum in non-cooling categories, such as water purifiers and solar products. Overall, we expect another strong quarter from Polycab/Eureka Forbes and weak prints from Voltas/Havells/Crompton.

W&C: Volume growth accelerates, possibly due to upfronting of govt. capex

The domestic industry witnessed an acceleration in cable demand during the quarter, possibly due to some upfronting of government capex. Wire demand, while weak initially, picked up through the quarter due to rising copper prices. We expect volume/value growth of 20%/23% in Polycab’s domestic W&C sales, even as its export growth (up 5% on a weak base) could be impacted by US tariffs and the Middle East war-related disruptions; W&C EBIT margin could see a healthy expansion on a weak base. For Havells, we build in 15% yoy growth in W&C sales, aided by a further ramp-up in capacity utilization in cables (the new Tumkur facility was commissioned in September 2024).

Large appliances: Watered-down summer impacted sales of cooling categories

The room AC industry is estimated to have declined 20-30% in 1QFY26, due to a high base, disrupted summer and aggressive channel stocking in the previous quarter. For Voltas, we expect a UCP revenue decline of ~16%, on the back of ~20% decline in RAC/air coolers, offset by steady growth in the commercial AC segment. For Lloyd (Havells), we estimate ~20% yoy revenue decline. Adverse operating leverage and higher-than-usual channel incentives (freebies) could weigh on the margins of both players. For Whirlpool India, we estimate 5%/10%/ (-)25%/(-)5% revenue growth in refrigerators/washing machines/RACs/Elica, leading to 3% revenue growth in 1Q (versus 16%/22% in 4Q/1QFY25), even as it would have registered strong market share gains across categories.

ECD: Fan industry has also declined due to a high base and weak summer

Based on our checks, the fan industry also declined in 1Q due to a high base (ECD revenues grew ~17% for the listed universe in 1QFY25) and a weak summer season. We expect ~5% yoy growth in ECD for Havells (versus +9.4% in 4Q), marginal decline yoy in ECD (versus +5.7% in 4Q) for Crompton, and ~20% yoy growth (led by the solar category) in FMEG for Polycab. For Crompton, within ECD, the decline in fans is offset by DD growth in pumps (aided by solar pumps) and appliances. We expect HSD growth in Butterfly (on a weak base), with healthy margin expansion (yoy). Eureka Forbes should report ~12% revenue growth (versus 10.7%/10.8% in 4Q/3Q), led by high-teens growth in the products business (despite some weakness in the GT channel, which was under pressure due to higher-than-usual stock holding of cooling devices) and some improvement in the value growth of the service business.

Above views are of the author and not of the website kindly read disclaimer