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NEW DELHI: Rising mercury, pent-up demand, and a lower base of the year-ago period could help consumer durables companies clock in robust business in cooling product segment this summer, according to Jefferies.

"Summer season is shaping up well, with temperatures soaring across most regions in India. This augurs well for durables—cooling products such as air conditioners and refrigerators, air coolers, fans as well as stabilisers," analysts at Jefferies said in a note on Indian electrical and appliances market on 19 March.

As per Jefferies, industry players are pointing to positive demand trends, with improved consumer sentiment over past few months. However, institutional business remains a concern.

"Channel checks indicate positive demand trends. While electricals are benefiting from housing revival (B2C), strong summer acts as a tailwind for durables (especially ACs, Fans & coolers). Channel inventories are near optimal," according to the note.

Given that last summer was a washout for companies that make and sell refrigerators, air conditioners, and other cooling appliances, retailers are keenly watching sales this season.

Select industry players expect double-digit growth in the air conditioner category, driven by government import restrictions in October last year, pent-up demand and a lower base, the note said.

Jefferies, however, flagged concerns around rising covid cases and fresh lockdowns and curfews that are currently being put in place.

Companies have also undertaken price hikes, especially on televisions and air conditioners since January. Others have also indicated further price hikes.

“Many players have taken cumulative price hikes of 5-9% in durables (mainly ACs) and could evaluate further calibrated hikes in peak season (April), depending on input cost scenario. Price hikes in appliances have been largely in tranches," according to the note.

In fact, Jefferies said a robust seasonal demand can help industry players pass-on hike in input costs with greater ease.

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