Will consumer durables stocks provide durability?

The consumer durable sector in the past one month has increased by 4.82% while during the same time, Nifty went up only by 3.71%. Now summers are here, monsoon is not expected to remain very bumper due to this there are expectations that sales of AC, coolers and fans might go up. This has given a boost to the companies. However, analysts are not that bullish on demand for other white goods products.

Companies that are on the radar in this sector are Dixon Technologies, Amber Enterprises and Whirlpool

Dixon Technologies is involved in contract manufacturing and it has come up with good earnings results. As per analysts white goods segment of the company may not perform very well but strong demand is expected from the home care and mobile segment. Although stock price has risen more than 25% and targets of various companies have been met.

The next company is Whirlpool. Although the company’s results in Q4FY23 were not that impressive. Its EBITDA declined 28.4% (YOY). The reason being muted demand in 4th quarter. Brokerages believe that factors like premiumization, improvement in costs and Elica (Kitchen appliance segment) can do well. ICICI Securities gave a target price of Rs 1,600 while Stock is trading around Rs 1433.

Given that its summer season and AC sales are going to increase. Amber Enterprises is also expected to perform well. It has already risen more than 16% in a month but there is still breathing room. Amber Enterprises make components for AC, electronic items etc. ICICI Direct expects the AC industry to grow 16% (YOY) in FY24 due to growth in the real estate sector and changing lifestyles. Brokerage house reported that in terms of bills of materials, Amber has the highest market share of 29%. Its share is trading at Rs 2,123. ICICI Direct gave a target price of Rs 2430 while BOB Capital Markets gave a target price of 2260.