Consumer Durables Sector: Consumer durables sector is facing increasing input castes due to rising commodity prices.
Consumer Durables: Commodity prices have been continuously increasing in the last few days. Most commodity prices have gone up by 15 to 25 percent on an annual basis and their prices are at several months high. In such a situation, the consumer durables sector is facing increasing input cast. In the coming days, due to this many companies can increase the price of their product. At the same time, this sector is also facing challenges from the supply side. However, demand has already improved and festive sales have also been better than expected. Experts believe that despite some challenges, some stocks related to this sector can perform well.
Watch commodity prices
Brokerage house Motilal Oswal says that consumer durables companies are eyeing commodity prices. This year, most commodity prices have gone up by 15 to 25 per cent on an annual basis. 25 percent in copper, more than 25 percent in steel, more than 14 percent in aluminum and even the prices of plastics are constantly increasing. In such a situation, the input cast of companies is increasing. With this, those companies which depend on the commodity for their product portfolios can increase the prices further.
The brokerage believes that the increase in copper prices will benefit the cables and wire segment. Right now we are moving towards the peak phase of construction. In such a situation, there is a strong demand for cable and wire in the coming days. Therefore, companies will want to gain by increasing the price. According to the brokerage, the consumer electrical companies will also pass on the pressure of input cast to the customers. In the coming days, fans and lights can become expensive.
The challenges of supply will end soon
Brokerage house MK Global says that the festive demand for premium products has been better than expected, which is a good sign. However, in the entry-level segment, some categories are facing challenges on the supply side. At the same time, the aggressive financing scheme of credit card companies has also been missing this time. But companies are assuming that the challenges of supply will reduce soon. Footfall is expected to increase in the coming days, which is still weak in mall-based stores. On the other hand, white goods have seen strong growth in the online channel. According to the brokerage, refrigerator demand remains strong with 15 to 17 per cent value growth. Demand has also improved in washing machines, ACs and TVs.
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Strategy on share
Brokerage house Motilal Oswal has included Crompton in the top picks. For this, investing a target of Rs 390 is advised. Havells has a neutral rating and a target of Rs 850 for the stock. For Voltas, the brokerage has given a neutral rating, giving a target of Rs 815. While downgrading Bluestar’s rating, it has set a target of Rs 680.
(Note: We have given advice here based on the report of the brokerage house. The market carries its own risks, so take the opinion of experts before investing.)
Source: www.financialexpress.com