Consumer electronics makers saw muted demand in the course of the initial two months of the April-June quarter owing to the second wave of covid-19, having said that, in June demand began choosing up, domestic brokerage and analysis firm Motilal Oswal observed. “As per current trends, demand remains robust at end-1QFY22, with a gradual scale-up expected on a month-on-month basis. The upcoming festive season holds the key for offtake across various categories,” the brokerage firm stated. Along with the pickup in demand, the customer electronics and durables sector is also witnessing consolidation in favour of organised players, which could assist listed players.
Although the demand is enhancing, customer electronics firms are nonetheless battling elevated commodity expenses. “With raw material costs elevated in the April-June quarter, gross margins were impacted. The intensity of the impact varied, with consumer electricals less impacted against consumer durables,” analysts at Motilal Oswal stated. They added that management commentary suggests value hikes of 8–12% across many categories in Consumer Electricals (barring Cables and Wires) in the initial half of 2021. “Further price hikes could act as a catalyst for the stocks, especially for the White good players.”
Stocks to acquire
Target value – Rs 435
Orient Electric is the major choose for analysts at Motilal Oswal in the Electricals segment. ”As the economy recovers from the pandemic, it (Orient Electric) could see robust margin expansion. We forecast a income / EBITDA / adjusted PAT CAGR of 17%/19%/23% more than FY21–24,” analysts stated. They added that Orient Electric is trading at a discount of 37% and 11% when compared to Havells and Crompton Greaves.
Currently, Orient Electric’s income is largely driven by fans. But, the organization has a item expansion method in location to enhance organization. “Such measures give us the confidence that the business is moving in the right direction – towards increasing the structural growth rate of the product portfolio,” the brokerage firm added. Currently, Orient Electric share value trades at Rs 326 per share, this translated to an upside possible of 33%.
Target value – Rs 2,650
Whirlpool is the major choose amongst white goods makers. The organization commands a robust 17-18% market place share in the refrigerators and washing machines category. “It has been gaining market share in volume terms and its product portfolio is poised for strong structural growth of 12–14% over the next decade,” the brokerage firm stated. “On a relative basis, demand for washing machines and refrigerators could potentially surprise over the next six months against a seasonal category such as ACs — provided consumer demand holds good as the economy opens up,” it added.
Whirlpool’s management has additional expressed intent to making use of India as an integral aspect of its international sourcing, walking on the China+1 method. Currently, the stock is quoting Rs 2,174 per share, implying an upside of Rs 22% from existing levels.
(The stock suggestions in this story are by the respective analysis and brokerage firms. TheSpuzz Online does not bear any duty for their investment tips. Please seek the advice of your investment advisor ahead of investing.)