Consumer Durables Sector Update - Commodity Price Inflation Weighs On Gross Margins: Motilal Oswal
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Motilal Oswal Report
While some companies in the consumer durables and electrical sectors have reported results, the common theme observed is the impact on gross margins.
Here is our assessment and certain key takeaways.
Copper, plastics, steel, and aluminum form the key commodity inputs for the fast moving electrical goods/white goods sector.
In H2 FY21, almost all commodities were at multi-year high levels – copper, steel, aluminum, and polyprop were up 44%, 38%, 22%, and 29%, respectively.
This took a toll on companies’ gross margins in Q3 FY21 and Q4 FY21.
All companies reported margin decline of 2–5% in H2 FY21 (barring Crompton Greaves Consumer Electricals Ltd.).
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