Motilal Oswal: Consumer Durables Segment Check - Commodity Price Inflation Warrants Price Hikes
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Motilal Oswal Report
The recent price increases in various commodities have emerged as a key input price risk to the sector. While we are witnessing price actions across categories to offset such risks, the impact may vary across categories/companies as summarized below.
Various commodities are witnessing a 15-25% YoY surge in prices, thereby raising concerns on input costs.
For instance, copper is up 25%, steel (over 25%), and aluminum (over 14%). Even plastic prices are seeing a strong upsurge.
Contrary to normal wisdom, commodity price inflation is not necessarily a negative catalyst as its impact varies across segments, and thereby various companies, depending on their product portfolio as well as their ability to undertake price increases.
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