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Nirmal Bang Report
Revenue growth for capital goods and consumer durables sector in Q3 FY22 is expected to be ~16.4% YoY, which largely reflects price-led growth.
In consumer durables/electricals, festive demand was good, but there was a sharp slowdown afterwards, somewhat offset by wedding season demand. Channel checks suggest that volume in Q3 FY22 was either flat YoY or declined across all product categories. Therefore, our revenue growth estimates largely reflect price-led growth.
Capital goods and consumer durables sectors continue to face challenges such as steep rise in commodity prices, higher transportation costs (both overseas ocean freight and domestic transport) and shortage of imported components due to global shipping challenges.
Price increases implemented during Q3 FY22 would help restore gross margins too. While pace of the price hike has further slowed, we believe that companies will report improved margins sequentially
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