Countdown to budget: Consumer Durables Stock Watch. New launches, brand building boost sales growth in first half

It was a good half year for consumer durables companies. Leaving Voltas and Bajaj Electricals, which have large projects business linked to revival in investment cycle, others did well.

Consumers loosened their purse strings thanks to better monsoon and the optimism created by the Seventh Pay Commission recommendations. TTK Prestige, Havells India, V-Guard Industries and Whirlpool recorded a sales growth of 8-16 per cent in the first half of 2016-17.

Havells saw strong growth in its consumer durables (fans, water heaters, appliances) business in the first half of the year. The overall sales growth was 13 per cent despite weak trends in the cables division. New product launches, increase in dealer distribution network and spending on brand building helped. In the December quarter, the company recorded a 13 per cent sales growth helped by market share gains that made up for some loss in business post demonetisation. In cables, where chunk of the business is in cash, customers shifted to organised players who accept digital payments, said the company.

TTK Prestige reported sluggish numbers for the June quarter, but growth revived in the September quarter that took sales growth to 8 per cent for the first half of the year. Whirlpool of India reported a double-digit sales growth in the first half of the year aided by higher sales across segments. The company indicated strong pick up in urban demand for the growth in sales. V-Guard saw a strong growth in revenues both in the first and the second quarter buttressed by higher demand for fans and water heaters.

Sales during Onam were stronger compared to the previous year. The December quarter numbers of the company, however, may not be as good. V-Guard has a significant presence in Kerala where the network of co-operative banks is quite large. RBI had put restrictions on co-operative banks exchanging old currency notes, and, the cash crunch was severe in the State during the quarter, say reports.

Profit growth for most players was way higher compared to revenue growth thanks mainly to a favourable revenue mix. For, Havells (profits up 29 per cent), and Whirlpool (up 36 per cent), a better product mix helped.

In the December quarter, though, Havells margins were impacted by the incentive schemes offered to dealers as they were hit by the cash crunch. V-Guard recorded a profit growth of 70 per cent in the first half of the year, thanks to savings on raw material costs and lower interest cost (on loan repayment).

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