Consumer Durables: Long-Term Prospects Remain Bright, CARE Report

Consumer electronics and appliances industry witnessed sharp contraction in demand in Q1FY21 due to the outbreak of Covid-19 and subsequent restrictions. However, demand has been improving from Q2FY21 due to ease in restrictions and is backed by pent up demand, CARE Ratings has said in a report.

"Further, festive season also supported the growth in the third quarter of the current financial year. This momentum is expected to continue in Q4FY21. In FY2022, production is expected to grow in the range of 5% to 8%. Work from home culture is expected to aid the growth in demand for goods that enhance personal convenience at home. Also, rural demand could outgrow the demand from urban markets on the back of rising rural incomes and government initiatives taken in relation to rural electrification. Long term demand prospects for the industry remain positive supported by growing working population, higher disposable income, easier access to credit and improving standard of living," Ratings agency CARE has stated.

Financial performance

The net sales of players in the consumer electronics and appliances industry grew by 23.5% y-o-y in Q3FY21 to Rs 14.2 thousand crores from Rs 11.5 thousand crores during the same period last year, the rating agency has noted.

Further, the net sales of players in this industry improved on a yearly basis from a decline of 54.7% in Q1FY21 to a growth of 23.5% in Q3FY21 as can be seen from the chart below. This growth was primarily driven by pent up demand and festive season in Q3FY21 in particular aided the growth.