“Q1FY22 turned out to be another disruptive quarter due to the onset of the second covid wave. Revenues and EBIT of the consumer durables companies under coverage of the brokerage was up 58% and 114% year-on-year largely on account of a low base but declined 13% and 29% on a two-year CAGR basis," it said.
However, demand recovery from June onwards has been impressive, they said.
“Over the past 18-months, appliance companies were less impacted compared to other discretionary categories. With stability in trade and demand, we expect the core drivers to continue to fire. Demand recovery since Jun’21 has been inspiring and in the absence of any further lockdowns, we expect the companies to show healthy earnings in the coming quarters," analysts said.
However, unlike last year pent-up demand is missing from markets barring for cooling products.
Analysts said that appliance companies will grow due to multiple drivers like penetration, housing demand, industrial capex, convenience, and cheap finance.
“Further, despite the pandemic, companies have grown their distribution reach, especially into the semi-urban and rural markets, thereby tapping new markets. With housing and home improvement theme sustaining, appliance products are expected to increase their wallet share over the coming years. We expect healthy earnings growth will help sustain the rich valuations," it said.