Capital Goods, Consumer Durables Q1 Preview - Rising Input Costs To Affect Margins: Nirmal Bang
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Nirmal Bang Report
Revenue growth for capital goods and consumer durables sector in Q1 FY22 is expected to be robust due to a favourable base (Q1 FY21 was affected by a relatively more severe lockdown than in Q1 FY22).
In consumer durables, demand was strong till mid-April 2021 while June 2021 also saw a decent off-take.
Our channel checks suggest that demand in June-21 was affected by poor business sentiments amid expectations of a third Covid wave and reduction in stocking by channel partners/dealers.
In capital goods, we believe that the execution would be affected but it would be higher YoY as projects sites/construction sites were operational.
However, both the sectors are facing challenges such as steep rise in commodity prices, higher transportation costs (both overseas ocean freight and domestic transport) and shortage of imported components due to global shipping challenges.
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