MUMBAI: Consumer durables makers have begun the current fiscal with cautious optimism, betting on a stronger summer and early demand recovery after a bruising FY26 marked by erratic weather, raw material inflation, supply-chain disruptions and weak operating leverage.
“We remain cautiously optimistic about the prospects for FY27,” Nikhil Sohoni, chief financial officer, Blue Star Ltd, said during the company’s Q4 earnings call, while cautioning that rising input costs and volatile exchange rates would make managing margins challenging.
Expectations of a stronger summer have lifted sentiment, helped by a weak FY26 base and demand strength in March–May. March was one of Voltas’s highest-ever sales months, while April and May also saw strong dealer-level sales.
The India Meteorological Department (IMD) has forecast a harsher summer and below-normal monsoon amid emerging El Niño conditions. Last week, it said heatwave conditions were likely to intensify across large parts of north-west, central and western India over the coming days.
For consumer durables makers, however, demand remains closely tied to volatile weather patterns that have repeatedly disrupted sales in recent years.
India’s heating, ventilation and air-conditioning market is projected to grow about 15% annually, with residential air conditioner sales expected to reach 30 million units by 2030, according to industry estimates.
FY26 pressure
Blue Star reported a 3.5% year-on-year rise in FY26 consolidated income to ₹12,463.9 crore, but net profit fell to ₹527.3 crore from ₹591.3 crore a year earlier. Voltas reported a sharper slowdown, with total income falling to ₹14,483 crore from ₹15,737 crore in FY25, while net profit dropped to ₹370 crore from ₹834 crore.
At Havells India, FY26 revenue rose 3.4% to ₹22,527.8 crore, while consolidated net profit climbed about 14.5% to nearly ₹1,690 crore. But Lloyd, Havells’ home appliances business, saw stress, with its revenue declining 23% after a 35% growth in FY25. The segment reported a loss of ₹214 crore against a profit of ₹117 crore in FY25.
For the full FY26, Crompton Greaves Consumer Electricals reported consolidated revenue of ₹8,095.52 crore, up from ₹7,864.08 crore in FY25. However, the company posted a consolidated net loss of ₹230.76 crore, compared with a net profit of ₹564.08 crore in the previous fiscal.
The downturn was driven by a combination of erratic weather, regulatory changes, commodity inflation and supply-chain disruption, which together squeezed margins across room air-conditioner (RAC) makers and broader electrical appliance companies.
The Bureau of Energy Efficiency tightened energy-efficiency standards in January, forcing AC makers to upgrade components and absorb higher costs alongside rising raw material prices.
Consumer durables makers are highly exposed to input-cost swings, as raw materials such as copper, aluminium and components, form a significant share of costs while competitive pressure limits how quickly price hikes can be passed on.
“I've not seen this kind of price escalation in the recent past,” said Anil Rai Gupta, chairman of Havells India in the Q4 analyst call in April. “Usually it happens, but it is not so steep and not across all product categories.”
Prices of copper, a key imported input, hovered at $9,500 per tonne in May 2025, compared with $12,500 currently.
Margins and outlook
Blue Star management highlighted how trade wars and geopolitical tensions continued to disrupt supply chains through FY26. “There were trade war-related hiccups all throughout the year, which impacted availability and prices of numerous raw materials,” said B Thiagarajan, managing director at Blue Star.
The company said price hikes across categories averaged about 8%, though a cumulative increase of nearly 13% would have been required to fully offset rising commodity and currency costs.
While the segment continues to grow, management cautioned that growth does not necessarily translate into margin expansion. “It is not necessary that margins will expand even if the market grows,” Thiagarajan said. “Margins will continue to remain under pressure.”
Voltas management said it is targeting a return to FY25 margin levels, with Ebitda margins falling to 4.5% in FY26 from around 7% in FY25. “We want to gradually improve the top line and the margin profile and sort of reach to a level which is closer to what it was in FY25,” the management said.
However, analysts remain cautious. “Variability in summer intensity and seasonal patterns may significantly impact sales momentum and operating leverage, while ongoing commodity inflation and pricing competition further constrain margin recovery,” analysts at Motilal Oswal Financial Services said in a report on Voltas on 15 May.
The pressure was not limited to RAC makers. Cables and wires maker Polycab India said it implemented cumulative price hikes of 18% to 19% between January and March.
Outlook for the sector remains closely tied to inflation trends. India’s wholesale inflation unexpectedly accelerated to 8.3% in April, its fastest pace in three-and-a-half years, as surging energy costs triggered by the West Asia conflict. This, coupled with price hikes of staples and fuel, could affect discretionary purchases.
“All these replacement purchases will get impacted if the festive season is not great,” said Anand Ramanathan, partner, consumer industry leader, Deloitte South Asia, told Mint. “The only upside is that the real estate as a segment is still looking OK and therefore some derived demand,” he said.