While India braces for scorching heat in summers this year, makers of consumer durables and electricals are elated. Recent channel checks indicate good demand in fans, Air Conditioners (ACs) and coolers in February and March.

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In an interaction with CNBC-TV18, appliance makers said their old inventory of fans is largely liquidated and have transitioned to new BEE (Bureau of Energy Efficiency) norms for which price hikes have either been taken or will be taken in first week of April.

Also read: Crompton Greaves is ready to lose margins to protect market share

Companies believe a hotter and longer summer will translate into higher sales for air conditioners, fans, coolers, refrigerators and other cooling products.

Channel checks by Jefferies Research suggests healthy demand for air coolers, pumps, cables and wires. “Air Coolers offtake is higher in dry regions. In Pumps, select dealers have cited improving demand (summer), especially in residential pumps. In Cables & Wires, traction seems to be healthy, as construction activity usually peaks pre-monsoons.” It expects players like Polycab India, Crompton Greaves, Havells India and Amber Enterprises to be the likely beneficiaries.

ACs and air coolers have seen channel filling ahead of summer and hence the inventory levels are now higher than the normal 3 to 4 weeks. Dealers expect this excess inventory to liquidate in the upcoming three months. If consumers are looking at purchasing a new AC, this could be a good time as discounts are now higher. Also, many new models have now replaced the older ones since January.

Crompton, a market leader in the fans category is now focusing on its appliances’ portfolio where Havells India is an existing strong player. Coupled with launching new SKUs in pumps, Crompton is slashing pump prices by 5 to 10 percent.

Source: Jefferies

The Consumer Electronics and Appliances Manufacturers Association expects sales in the summer periods of March to May this year to be anywhere between 15 to 20 percent higher than last year.

Although, Jefferies expects 15 percent sales growth in last quarter of FY23 for durables and electricals manufacturers, where softening commodity prices will provide some degree of support to margins. However, unseasonable rains will be a key monitorable for summer-centric product manufacturers like Symphony, Crompton, Havells, Bajaj Electricals, Orient Electric, among others. that may dampen the offtake in the June ended quarter.

Source: Jefferies