Capital Goods, Consumer Durables Q4 Preview - Strong Orders, High Mercury Levels To Drive Growth: Nirmal Bang

Nirmal Bang Report

In Q4 FY23, we are expecting strong revenue growth for the capital goods companies (up 25.2% YoY) under our coverage on the back of robust order bookings.

In the consumer durables segment, we believe that demand moderated, particularly for air conditioners in March 2023, due to unseasonal rains post an uptick from mid-February 2023 amid rising Mercury levels. Consequently, we are building in 11.5% YoY topline growth for our coverage consumer durables companies.

For consumer electricals companies, we are building in 9.1% YoY topline growth, mainly due to muted primary off-take of starrated fans amid higher-than-normal channel inventory.

We expect up-stocking of wires and cables by dealers and distributors as copper prices have risen by ~27% from their July 2022 lows. Capital goods and consumer durables companies are expected to show margin improvement on the back of easing commodity cost headwinds and improving supply chain situation.

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