Goldman Sachs expects a slowdown in growth for consumer durables and electrical companies in the first quarter of 2025-26 (FY26) due to weak seasonal demand. But lower inflation, tax cards, favourable interest rates, lower interest rates, that is, should reflect in demand for the sector and sentiment in the second half.Pulkit Patni, India Industrials Analyst at Goldman Sachs, said, “Given erratic summer, it is evident that any company having a summer portfolio is likely to see weak demands. All our channel checks are suggesting that whether it is with EMS companies or with brands April-June quarter 2025 (Q1FY26) is looking to be a weak quarter.”
However, the firm is optimistic about a recovery in the second half of the year, supported by a low inflation environment, tax cuts, and favourable interest rates.
Patni said, “We don’t want investors to miss the forest for the trees, that is there are a lot of factors which should support growth in the second half, in the year thereafter… companies that have diversified product base, we think are well placed in that scenario of a second half pick up.”He pointed out that performance will vary by segment depending on factors such as market penetration and base effect. With the real estate sector in a three-year upcycle, demand for products like cables, wires, switches, and switchgears is expected to remain strong. The low base is also likely to benefit diversified electrical companies.Read Here | India’s power demand surge driven by appliances, not AI or EVs: Goldman Sachs
For the air conditioner segment, Goldman Sachs expects mid-single digit growth in 2025-26 after strong growth in 2023-24 (FY24) and 2024-25 (FY25).In contrast, other segments are likely to see early double-digit growth, giving confidence for a broader sector recovery in the second half of FY26 and into FY27.Retailers are cautiously optimistic about the outlook for the sector despite a weak summer season. Kumar Rajagopalan, CEO of the Retailers Association of India, said the early and decent rainfall at the end of May was a positive signal. He noted that growth has reached around 7% so far and expects June to also show good numbers. “Retailers look forward to the double-digit growth that they are otherwise accustomed to,” Rajagopalan said.Vijay Sales Director Nilesh Gupta highlighted that consumer sentiment remains strong even though summer sales were impacted by erratic weather. He said parts of South and East India saw early monsoons, affecting sales of summer-dependent products like coolers. However, other product categories performed steadily.According to Gupta, “The other product categories, the televisions are holding pace… although it’s a single-digit growth. Washing machines are growing again after slight growth last year, which is a good sign. Refrigerators have been flat due to the summer, but mobiles, laptops, and small appliances are doing well.”He believes air conditioners continue to sell beyond the summer months, especially with the occurrence of a “mini summer” in October in some regions. Gupta is hopeful that losses from the summer season can be recovered later in the year. He added that despite a weak first quarter, the rest of the year, particularly the Diwali season, should be stronger compared to last year.For the entire discussion, watch the accompanying videoFollow our live blog for more stock market updates
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