Consumer Durable Sector Crawls on Low Demand And High Steel Price

The Indian capital market provides a wide range of investment avenues, with a range of sectors, for the investors. Among various sectors, IT, Pharmaceutical, FMCG (whose major revenue is driven from the export markets) are performing well. The major reason behind it is the rupee appreciation against USD and an improved customer sentiment that led to an increase in demands. Contrary, on the domestic market driven sector, consumer durables is going through a slowdown. In this article, we are taking in to account the performance of the companies and stock price movement in consumer durables sector for the period between January 1, 2014 to March 13, 2014.

Consumer durables are basically categorised in to two types- brown goods (includes television, electronics, digital cameras etc.) and white goods (includes air conditioners, refrigerators, electric fans, sewing machines etc). The beginning of the festive season in October is considered to be the peak season for the consumer durable companies. However, this festive season there was not much demand for most of the consumer durables. Also, the hike in steel prices (major raw material) increased the pain of this sector and hence led to a slowdown in the past couple of quarters.

Further, the consumer durables Index of Industrial production (IIP) for April 2013 - January 2014 period, contracted by 12.5% over the corresponding period of previous year. On monthly basis also, the consumer durables index contracted by 21%, 16% and 8% during November, December and January respectively, compared to its previous years similar period.

The effect of a slowdown in the entire consumer durables sector can be seen on the stock prices of this sector’s companies. The companies like High Energy Batteries (India), Khaitan Electricals, Hawkins Cookers,  TTK Prestige, Jaipan Industries stock prices were impacted the most and dropped by 40%, 33%, 21%, 17%, and 11% respectively. However, in the durables sector there were few stocks which performed well. Symphony being the market leader reaped the benefits and showed a robust growth of 38%. Other gainers are Bajaj Electricals and Hitachi Home & Life Solutions, which gained by 15% and 10% respectively.