1 hr ago
Copper and Aluminium Surges Pressure Consumer Durables Margins
Copper, aluminium, and plastic-like materials became much more expensive in July, August, and September.
These materials are used to make many appliances and electronic products.
Higher costs can make it harder for companies to earn profits.
Companies may raise prices, but that could affect how much people buy.
Nomura expects sales at many appliance companies to grow, partly because prices are higher and last year was a weak comparison.
Demand for premium products stayed steadier than demand for cheaper products.
The report also expects different companies to have different results.
It sees Nykaa and Avalon as possible outperformers, while several others may fall short of market expectations.
Copper averaged 57% and aluminium 35% more than a year earlier in July-September; polymer prices rose 34%.
Nomura forecast about 15% revenue growth and 20% EBITDA growth for covered consumer durables companies in FY27’s second quarter.
Nomura said sales growth was driven more by price increases than volumes, with premium demand steady and mass-market demand weaker.
Air-conditioner sales were estimated to rise at a healthy double-digit pace, while announced price hikes of 5%-7% may not fully offset cost pressure.
Nomura expected mixed results across companies, with Nykaa and Avalon potentially beating consensus and Kaynes, Voltas, CarTrade and LG Electronics India potentially missing it.
- Who
- Consumer durables and electronics manufacturers, with estimates from Nomura.
- What
- Rising materials costs are expected to pressure profits as companies report second-quarter FY27 results.
- Where
- The article discusses companies and markets in India.
- When
- The price comparisons cover July-September; the results discussed are for the second quarter of FY27.
- Why
- Copper, aluminium and polymer prices rose sharply, increasing production costs.
Growth and resilience
Cost and execution risks
Consumer durables outlook
Growth and resilience
Nomura expected about 15% revenue growth and 20% EBITDA growth for the covered companies, supported by price increases and recovery from a weak base.
Cost and execution risks
The report said growth was driven more by prices than volumes, with weaker mass-market demand and higher input costs weighing on companies.
Air-conditioner margins
Growth and resilience
Nomura estimated healthy double-digit industry sales growth, supported by a low base and weak monsoon.
Cost and execution risks
Its commodity index indicated 8-10 percentage points of cost pressure; the report said further price increases may be needed and flagged downside margin risk for Voltas.
Company earnings expectations
Growth and resilience
Nomura expected Nykaa and Avalon Technologies to outperform Bloomberg consensus.
Cost and execution risks
Nomura said Kaynes Technologies, Voltas, CarTrade and LG Electronics India may fall short of consensus.
Key facts
- Copper price increase
- Average prices were about 57% higher year over year in July-September.
- Aluminium price increase
- Average prices were about 35% higher year over year.
- Polymer price increase
- Prices rose 34% over the same period.
- Durables revenue estimate
- Nomura estimated about 15% second-quarter growth for companies it covers.
- Durables EBITDA estimate
- Nomura estimated about 20% growth and an 8.6% margin, 30 basis points higher year over year.
- Air-conditioner price hikes
- Companies announced increases of 5%-7% from October 1.
- Dixon phone shipments
- Nomura expected about 9.5 million mobile phones shipped, versus 7.5 million in the prior quarter and 10.6 million a year earlier.
Sources
Related news
Copper Surge Drives Indian Electronics Makers Toward Aluminium
Appliance Prices Set to Rise Again From October 1
LG Electronics Shares Hit Record High on Growth Outlook
Analysts See Metals Stocks Benefiting From Elevated Copper Prices
Nomura sees Nestle, Marico and Tata Consumer surprising in Q2
Appliance Makers Forecast Festive Growth Despite Price Hikes
Taparia Recommends Nykaa Buy, LIC Futures Sell for Tomorrow
Indian Stocks Move Sharply as Finance, Retail Shares Diverge
16-Year-Old Founder’s SAMMMM Raises ₹10 Crore, Reports 17x Growth
Stocks in Focus: Sterlite Tech, Nykaa, JSW Cement, Others
