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Our expectations—(1) acceleration in W&C, led by volumes and ASP (sharp RM inflation) and a low base, (2) continued decline in RAC, though of lower magnitude, aided by some channel stocking ahead of the BEE table change, (3) water heaters to offset weakness in fans within ECD and (4) good growth momentum in water/air purifiers. We expect another strong quarter from Polycab/Eureka Forbes, a resilient print from Havells (aided by W&C) and weak earnings from Voltas/LG/Whirlpool/Crompton.

W&C: Robust growth led by industry tailwinds in cables and rising RM prices

Revenue growth for W&C is expected to be robust in 3Q over a soft base (3QFY25 saw channel destocking in wires), aided by strong demand for cables and healthy pricing growth (average copper/aluminum prices were up ~19%/14% yoy on an M-1 basis in 3Q). We expect ~40%/10% yoy growth in domestic/exports in Polycab’s W&C segment. We estimate W&C’s EBIT margin at 14%, up 50 bps yoy, led by operating leverage, but down 110 bps qoq due to inferior product mix and higher A&P spends. For Havells, we built in a 27.5% yoy growth in W&C sales, led by inflationary RM prices and capacity expansion in cables (new Tumkur facility was commissioned in September 2024). We expect W&C’s EBIT margin to expand 240 bps yoy to 13.5%.

Large appliances: High channel inventory and adverse season impact continues

Secondary sales in RAC remained weak in 3Q due to a weak season, despite the GST rate cut. Primary sales could have partly benefited due to pre-buying ahead of the BEE table change. We expect 9%, 7.5% and 2% yoy revenue declines in Voltas (UCP), Lloyd and Blue Star (Unitary Products), respectively, in 3Q. The reduction in the quantum of consumer schemes and better absorption of factory overheads are likely to drive qoq improvement in margins for RAC players (though Voltas UCP/Lloyd could still witness EBIT losses). For LG, we estimate a 1.5% yoy revenue decline, on the back of (-)3%/+2% growth in home appliances/home entertainment divisions, whereas for Whirlpool, we estimate 2% yoy growth in revenues. We expect LG/Whirlpool to report 32%/18% yoy EBITDA declines due to high RM inflation, pricing restraint, higher e-waste expenses and adverse operating leverage.

ECD: Cooling categories will still decline, but drag is expected to be lower

High channel inventory and weak seasonality would have weighed on the fans category as well. We expect ~5% yoy growth in ECD for Havells (growth in SDA and winter products, offset by subdued growth in fans), ~3% yoy growth in ECD for Crompton, as a decline in TPW fans/air coolers could be offset by growth in ceiling fans (pre-BEE table change), solar pumps and water heaters, and ~12% growth in Polycab’s FMEG (led by solar, switches and switchgears offset by weak fans demand). For Eureka, we estimate 14% revenue growth (versus 14.7%/9.8% in 2Q/1Q), led by continued robust momentum in the products business (3Q is seasonally strong for air purifiers as well), partly offset by weak service revenue growth (albeit with continued momentum in service bookings).

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