EUR 120.00 For Business Accounts Only

MOSL: CONSUMER ELECTRICALS-Feedback from Delhi Trip: ACs immune to slowdown

CONSUMER ELECTRICALS: Feedback from Delhi Trip: ACs immune to slowdown; Tax cut to have likely impact of ~4-12% on our coverage universe

 

• Air Conditioner sales growth outpaces other categories: Although 2Q is traditionally a lean season, AC sales showed healthy growth of ~15-20% in Jul-Aug'19. We believe that post the bumper summer season, channel refilling itself will drive growth for air conditioners, and hence, the category may be immune to consumption slowdown in the near term. While TV sales remain under pressure, washing machine and refrigerators may see flat to muted growth.
• No sign of price hikes yet for ACs: Despite strong growth, price hikes elude the AC segment. Note that input cost pressure (higher import duty and INR depreciation) has been high for some time now, but players are continuing to target market share gains. Our interactions suggest that at some point, players would need to take price hikes, but timing of the same is uncertain.
• Industrial categories continue to remain under pressure: Industrial categories like cables and switchgears continue to garner low growth, similar to the trend in 1QFY20, as construction activities have slowed owing to funding constraints.