As China continues to battle the outbreak of the deadly Coronavirus, closed factories around Hubei province of China could impact the business of Indian consumer durable manufacturers that import various components from Chinese suppliers.
As China continues to battle the outbreak of the deadly Coronavirus, closed factories around Hubei province of China could impact the business of Indian consumer durable manufacturers that import various components from Chinese suppliers. According to the data available with the department of commerce, China plays a significant role in supplying key components such as compressors for air conditioners and refrigerators, with imports accounting for 76 per cent and 91 per cent respectively. In the midst of all this, brokerage firm Emkay Global Financial Services has put a buy call on three stocks that might gain despite the manufacturing halt at Chinese factories.
Amber Enterprises: As companies look for other sources to get their hands on components, Amber Enterprises, a manufacturer of various components of consumer durables could benefit. “We believe that contract manufacturers are better-placed with long-term positive impact as the companies will look to reduce the dependence on China starting from assembly and some component sourcing as well. Amber can benefit from higher component sourcing by brands,” said Emkay Global Financial Services in a research note. Amber has various factories in India and other South Asian countries which might work to its benefit. The brokerage has a ‘buy’ call on Amber Enterprises with a target price of Rs 1,664.
Whirlpool of India: Although the company has one refrigerator supplier in Hubei, it largely remains well stocked up on supplies. Whirlpool share price has gained more than 45 per cent in the last six months currently trading at Rs 2,246. The target price for Whirlpool of India is set at Rs 2,700 by the brokerage.
Dixon Technologies: Share price of Dixon technologies – which is already up by 99 per cent in the last six months – is likely to benefit as the company claims it prepared itself for the Chinese new year in advance and sees no problem for the company in the current quarter. “Our China-dependent supply chain was taken care of up to March,” said the company. The brokerage has set a target price of Rs 5,111 on Dixon Technologies which is currently trading at Rs 4,614.