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HDFC Securities Institutional Equities
With consumer sentiment witnessing a gradual improvement, rising temperatures and the expectation of a hot summer season are expected to support growth for consumer durables in Q4.
Stable commodity prices and improving op-lev will enable sequential improvement in margins.
We expect our consumer durable universe to register a revenue/Ebitda/profit after tax growth of 22/12/18% YoY (13/9/8% five-year compound annual growth rate).
Within electronic manufacturing services, industry tailwinds will continue to support accelerated growth momentum and we expect our EMS universe to deliver revenue growth of 36% YoY.
However, increasing mix in favour of high-volume low-margin business will lead to a dip in margins over last year leading to Ebitda/profit after tax growth of 20/11%.
We rate Crompton Consumer, Orient Electric and Havells as our top picks in consumer durables while preferring Amber Enteprises, Syrma and Dixon within EMS.
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