Monsoon Blues: Consumer Durables Struggle as Summer Demand Drops

The consumer durables sector encountered a difficult first quarter in FY26, as reported by Union Bank of India Research. The premature arrival of monsoon hampered summer sales, drastically affecting demand for cooling products including air conditioners and coolers, leading to over a 30% year-on-year decrease in sales figures. Additionally, fans and refrigerators experienced double-digit declines, with the overall revenue for companies under review remaining stagnant at Rs. 273 billion.

Despite the slump, certain sectors within the industry showed resilience. The demand for wires and cables surged, owing to infrastructure needs and rising copper prices, while moderate growth was observed in switchgears and small appliances. The B2B lighting segment, supported by LED price stabilization, also maintained its pace. Polycab emerged as a leader with a 26% revenue increase, driven by significant rises in its wires, cables, and FMEG segments. However, companies reliant on summer products, such as Voltas, Crompton, and Havells, reported significant sales declines.

Profit margins were another area of concern. Despite some firms managing to enhance gross margins through cost control, EBITDA margins experienced a contraction. Electrical firms saw a slight 27 basis points rise, but durable firms faced a steep 215 basis points drop in margins. This was attributed to operating de-leverage and inadequate fixed cost absorption. Polycab notably improved its EBITDA margin by 210 basis points, while Voltas, Havells, and Crompton faced margin contractions of up to 400 basis points, highlighting ongoing profitability challenges amid shifting market dynamics.

(With inputs from agencies.)