PL Sector Update: Consumer Durables - Electricals Channel Check update (Nov-2023)

Consumer Durables - Praveen Sahay - Research Analyst, Prabhudas Lilladher Pvt Ltd.

Electricals Channel Check update (Nov-2023)

We visited Lohar Chawl, wholesale market for electronics and electrical goods in Mumbai, and interacted with 11 electrical dealers/retailers (Havells, Bajaj, Crompton, Orient, Atomberg, Standard) to assess demand for wires, switches and fans. According to our conversations, fan demand was moderate, with competitive pricing. However, there was healthy demand for wires and switches. Below key takeaways: -

Competitive Pricing in Fan & Price correction in wires

The channel indicates intense competition in the fan segment, resulting in competitive pricing. Atomberg has taken price correction as per channels, while Crompton currently offers the most competitive pricing. Wire prices have decreased by 2-3%, whereas switch prices remained relatively stable.

Demand (Positive MoM)

Fan sales maintained a moderate pace during the festival season, while there was healthy demand for wires and switches, fueled by optimistic sentiments in the real estate sector.

Fan Inventory normal to low

Our dealer interactions indicate that fan inventory levels in channels are normal.

Most selling fans

Crompton/Orient fans are most selling in the affordable/premium range. Slow down in demand of BLDC fans has been observed. Atomberg fans, known for energy efficiency and remote control features, are preferred, especially with their reduced pricing.

Other highlights

Major volume at dealer level is comprised of simple fans rather than designer ones. Meanwhile, there has been significant growth in demand for wires and switches.

Impact on our coverage companies in Q3FY23

§ Havells’ ECD segment - The price competition in fans continues amidst moderate demand, while shift in festival demand to Q3FY24, expecting YoY growth of 9-10% in ECD segment.

§ Crompton Consumer - During our visit to Lohar Chawl, we observed Crompton's promotional offers driving better sales compared to its competitors. As a result, Crompton's ECD segment is anticipated to outperform the sector in Q3FY24, with an expected YoY growth of around 12-13%, akin to Q2FY24

§ Bajaj Electricals – We haven’t done enough channel checks related Bajaj portfolio. However, shift of festival to Q3 from Q2, expect single digit growth in its’ Consumer Products segment.

§ RR Kabel – Anticipated to sustain its’ healthy double digit volume growth in W&C segment.

Glimpse of our visit - Lohar Chawl, Mumbai