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1QFY26 was an eventful quarter for the durables/electricals space—(1) W&C companies continued to report robust growth/margins, (2) room ACs and ECD (fans/air coolers) reported a sharp decline in sales, impacted by a weak season, (3) margins were under pressure across the board (barring W&C) and (4) multiple companies announced forays into adjacent categories—Voltas forayed into fans, Bajaj into switchgears and V-Guard into lighting. Our sector picks remain Eureka Forbes, Crompton and Whirlpool.

W&C: Robust growth momentum sustained, with a positive margin surprise

W&C companies (listed universe) reported over 25%/35% yoy revenue/EBIT growth in 1Q, led by volume growth and possibly aided by some upfronting of government capex. Apar/Polycab/KEI led the pack with ~36%/31%/31% revenue growth; volumes grew 25% for Polycab. V-Guard and Finolex underperformed with ~8%/14% sales growth. EBIT margins of Polycab/Havells surprised positively, by expanding 190/130 bps yoy to 14.7%/12.6%, aided by gradual RM inflation (and low volatility). The export outlook remains uncertain, given the US tariff-related headwinds. Some companies acknowledged that channel inventory was slightly elevated at the quarter end.

ECD: Seasonal categories (air coolers, TPW fans, pumps) decline sharply

Seasonal categories of air coolers, TPW fans and pumps (ex-solar) declined ~47%, ~36%, and ~18% yoy, respectively, in 1Q, given a weak season and a high base. Against this backdrop, ECD companies reported ~7%/33% yoy declines in revenues/EBIT. Polycab outperformed with ~18% growth (led by 2X yoy growth in solar), followed by Eureka Forbes (~10%), whereas V-Guard, Havells, Bajaj, Crompton and Orient reported (-)16%, (-)14%, (-)11%, (-)8% and flat sales, respectively. Bajaj and Orient reported DD decline/LSD growth (favorable base) in fans. On a TTM basis, ECD growth stood at ~28% for Polycab, ~13% for RR, ~11% for Eureka, ~8% for Orient, 5.5% for Havells and 3.2% for Crompton. Bajaj forayed into LV switchgears—it will have outsourced manufacturing and a growth-over-margin focus initially. V-Guard’s foray into lighting was after considering the feedback of channel partners.

White goods: Washout quarter for room ACs

The room AC (RAC) category declined 30-40% yoy in 1Q, impacted by high channel inventory, elevated base and a weak season. Lloyd, Voltas and Blue Star reported (-)34%, (-)25% and (-)13% yoy sales, respectively, in the overall/UCP/UP segments in 1QFY26 and (-)4%, (-)6% and +0.6% yoy growth, respectively, in 1HCY25. Adverse operating leverage and higher promotions (to clear channel inventory) weighed on margins in the space. RAC inventory remains elevated—Voltas (3-4m/2m at company-/channel-level) and Blue Star (1m higher-than-usual); the near-term growth outlook remains challenged. Voltas expects the RAC industry to be flat to (-)10% in FY2026E, whereas Blue Star still expects 10-15% growth. Whirlpool reported a 2.6% yoy fall in sales (+4.9% yoy growth in 1HCY25), but with 1.8% yoy EBIT growth, possibly aided by a cut in A&P spends.

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