Shares of consumer durables companies have been on the fire on Dalal Street as scorching heatwaves across major parts of the country this year have raised the prospects of strong sales of air conditioners, air coolers and other products.
The Nifty Consumer Durables index has risen around 8% so far this month with Whirlpool of India, V Guard Industries and Voltas among the biggest winners. This would be the biggest monthly gain for the index since July 2022.
So far in 2024, the sectoral index has skyrocketed nearly 22%, sharply outperforming the benchmark Nifty 50, which has risen around 8.5%. Market participants believe more gains could be on the cards due to factors like changing weather and rising rural income
.Shares of major AC makers like Whirlpool of India, V Guard Industries, Voltas and Blue Star have surged 30-80%. Even electronics manufacturing services companies like Dixon Technologies and Amber Enterprises India have surged 78% and 27%, respectively.
“Investors can look to enter these stocks even right now as the consumer boom is just beginning in India. We can see more inflows into consumer durables in the next 3 months,” said Vinit Bolinjkar, head of research at Ventura Securities.
Bolinjkar said no one comprehended this kind of summer. “We can see people trying to use rainy season to get discounts on their purchases,” he said.
Recently, several brokerages, including Goldman Sachs, raised their target price for shares of consumer durables companies in light of strong summer season.
Deepak Jasani, head of retail research at HDFC Securities, said the industry will continue to do well in the longer term. But he said the margins will not expand so much due to an increase in the competition. However, this will be compensated by higher volumes. The overall consumption basket has been gaining traction in India as investors believe the rural income is set to rise and this would result in higher demand for consumer goods companies.