Consumer Durables - HDFC securities Durables... · Outperformers and Underperformers: Within the...

25 February 2021 Sector Update

Consumer Durables

HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters

Demand-driven recovery continues In continuation to our take in our Appliance Thematic (Looking Beyond Near-

term Disruption), wherein we talked about faster recovery of B-C categories, share

gain by leading players, and multi-year growth opportunity drivers, our HSIE CD

index clocked robust 11/26% revenue/EBIT growth in the past two quarters. We

maintain our view that Appliance companies would grow through multiple

drivers like penetration, housing demand, industrial Capex, convenience, and

cheap finance. Leading players are present mainly in the urban markets with

incremental distribution expansion around semi-urban and rural markets. A large

untapped market is available to leading companies, which provides headroom for

growth in the coming years. RAC, Kitchen Appliances, Ref and W/M will be

driven by consumers’ convenience, rising electrification, aspirational demand, and

expansion of distribution. Appliance products are expected to increase the wallet

share over the next three years. Government’s enhanced focus on Make-in-India

and Aatmanirbhar Bharat would push domestic manufacturing. The availability

of the entire value chain and manufacturing incentives given by the government

should boost domestic manufacturing. It would reduce the impact of currency

volatility, improve working capital, and lead to better development of new

products. Companies will also be able to accelerate export opportunities, which, as

of now, are in nascent stages. We expect growth to be robust across categories,

driven by continued lifting of restrictions and increasing economic activity. We

have a BUY rating on Crompton and an ADD rating on Havells, Voltas, V-Guard,

Symphony and TTK Prestige.

Universe clocked robust 3Q: Our HSIE CD Index posted a robust recovery in

3QFY21 with revenue/EBIT growth of 21/38% YoY (7/3% in 3QFY20 and 1/15%

in 2QFY21). The revenue recovery was led by cooling products, ECD and OEMs,

which clocked growth of 33/30/88% YoY. The key drivers of growth during the

quarter were pre-buying, pent-up demand, reduced restrictions on movement of

people and improving sentiment. C&W and lighting also returned to growth,

after a tepid 1HFY21, as construction activity resumed. However, recovery in

these segments was gradual compared to other segments.

Outperformers and Underperformers: Within the Consumer Durables universe,

Dixon, Havells, Voltas, IFB and V-Guard outperformed, clocking revenue

growth of 120/39/33/33/32% YoY. Growth in categories like RAC and ECD was

robust, aided by work-from-home as well as pent-up demand, while OEMs

benefited from an increased focus on Make-in-India. Symphony, KEI, Blue Star,

and Amber continued to struggle with revenue contraction of 40/12/9/3% YoY,

owing to channel/company inventory and supply constraints.

Margin recovery faster-than-expected: Companies across segments saw strong

margin expansion, despite the high commodity inflation impacting gross

margin. Oplev, price hikes, product mix as well as an increased focus on cost

rationalisation drove EBITDA. EBIT growth was robust across the board as

Cooling Products/ECD/Lighting/Cables/OEM clocked 77/50/45/11/73% YoY

growth. Lighting margins sustained recovery, driven by price hikes by most

players since 2QFY21.

Near-term outlook: Pent-up demand (most seasonal categories missed out

massively in the last season), work-from-home (to support convenience driven

categories), improving housing activities and resumption of Capex will sustain

strong revenue traction in the coming quarters too. Leading companies are

expected to pass on raw material inflation while restoring operational cost will

be compensated by oplev. Thereby, EBITDA margin will remain healthy in the

coming quarters albeit margin expansion is expected to be slower than the past

two quarters. Earnings potential will sustain the rich valuation and seasonal

channel filling will be the key monitorable for stock performance.

Company CMP (Rs) Reco.

Havells 1,146 ADD

Voltas 1,016 ADD

Crompton 382 BUY

V-Guard 230 ADD

Symphony 1,046 ADD

TTK Prestige 7,045 ADD

CD- Aggregate Revenue Growth

CD- Aggregate EBIT Growth

CD: Sector Valuation Premium (12-

month) Over Nifty 50

CD: Earnings vs. Valuation

Naveen Trivedi

[email protected]

+91-22-6171-7324

Aditya Sane

[email protected]

+91-22-6171-7336

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https://www.hdfcsec.com/hsl.docs/Appliances%20-%20Looking%20beyond%20near-term%20disruption%20-%20HSIE-202007270912033099697.pdf

https://www.hdfcsec.com/hsl.docs/Appliances%20-%20Looking%20beyond%20near-term%20disruption%20-%20HSIE-202007270912033099697.pdf

Page | 2

Consumer Durables: Sector Update

CD Universe Performance

Revenue Performance

YoY Gr (%) 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 FY16 FY17 FY18 FY19 FY20

Havells 28 9 4 2 (10) (20) (45) 10 39 3 14 33 24 (6)

Voltas 9 2 24 0 0 1 (52) 12 33 10 5 6 11 8

Crompton 10 7 12 4 4 (15) (47) 13 26 11 10 8 11 1

V-Guard 12 12 10 4 5 (27) (42) (0) 32 7 15 15 12 (3)

Symphony (27) (11) 103 32 30 12 (75) (43) (40) 20 20 4 (24) 37

Whirlpool 26 8 20 18 5 (0) (48) 15 18 6 15 23 12 6

Blue Star 18 19 4 21 12 (19) (60) (28) (9) 18 23 7 13 2

Polycab

17 15 24 24 (14) (49) (6) 12 11 6 23 18 11

Johnson Hitachi 15 6 20 9 0 (35) (72) (18) 12 6 17 14 3 (2)

TTK Prestige 23 7 4 4 (1) (14) (52) 3 24 10 8 15 16 (2)

Amber 53 73 75 89 52 10 (79) (35) (3) (11) 51 29 29 44

Bajaj Electricals 89 10 14 (32) (41) (27) (53) 11 17 8 (7) 20 41 (25)

Orient Electric 21 2 31 17 18 (12) (69) (0) 25 9 9 13 17 11

IFB (Home App) 27 19 16 8 4 (25) (56) 0 33 20 20 23 15 1

Dixon 17 44 94 90 25 (0) (55) 17 120 16 77 16 5 47

Hawkins 25 9 18 12 11 (21) (29) 0 20 6 (6) 8 18 3

KEI Industries 22 22 22 24 21 0 (31) (16) (12) 14 14 31 22 16

Finolex 14 3 2 0 (6) (21) (53) (11) 18 5 4 8 6 (7)

EBITDA Performance

YoY Gr (%) 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 FY16 FY17 FY18 FY19 FY20

Havells 12 (12) (11) (10) (9) (22) (53) 79 89 6 9 27 13 (13)

Voltas 1 (43) 20 (2) (16) 33 (77) (7) 50 6 34 15 (8) 12

Crompton 8 2 15 4 9 (16) (47) 48 46

13 10 10 2

V-Guard (9) 106 53 56 32 (42) (87) (5) 91 34 17 6 3 11

Symphony (45) (17) 2,300 36 40 20 (133) (52) (48) 51 2 6 (39) 49

Whirlpool 9 23 24 32 (8) (20) (85) 28 12 16 27 15 15 5

Blue Star (0) 81 (16) 27 35 (66) (99) (25) 43 28 3 24 25 (18)

Polycab

(29) 19 26 6 23 (72) 15 11 11 (2) 52 31 19

Johnson Hitachi (131) 4 31 (62) (1,200) (65) (120) (360) 107 (11) 37 19 (18) 5

TTK Prestige 28 11 1 7 (3) (45) (86) (1) 42 19 6 21 22 (9)

Amber 20 67 104 169 87 (10) (105) (41) 16 11 15 41 16 45

Bajaj Electricals 96 (49) 2 (70) (50) (52) (126) 333 116 196 (8) 21 16 (39)

Orient Electric 2 (15) 66 28 68 (8) (144) 164 86 39 16 37 3 25

IFB (4) na (12) 42 (39) na na 49 539 (41) 140 52 (41) (56)

Dixon 50 37 104 93 32 49 (68) 42 95 65 61 23 20 65

Hawkins 3 5 32 30 59 (34) (55) 1 4 34 9 (5) 22 21

KEI Industries 39 34 32 21 19 (10) (37) (3) (8) 26 12 24 30 13

Finolex 12 9 (18) (0) (11) (5) (69) (63) 4 29 10 17 4 (9)

CD Universe – CY 2020 Revenue Growth CD Universe – CY 2020 EBITA Growth

Source: Companies, HSIE Research Source: Companies, HSIE Research

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Page | 3


CD Category-wise Performance (GREEN/RED is outperformer/ underperformer in the category in LTM)

Cooling Products

Cooling products saw a strong revival in 3QFY21 after a weak performance of the

past three quarters due to the impact from lockdowns. Pent-up demand, work-from-

home and pre-buying ahead of expected price hikes boosted the growth in the

segment. Over LTM, Voltas and Lloyd led the pack with strong growth, while

Symphony and Hitachi were the laggards.

Revenue (Rs mn) 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 LTM FY16 FY17 FY18 FY19 FY20

Voltas (UCP) 17,488 5,256 6,005 11,989 7,071 5,717 8,396 33,172 25,210 30,469 32,261 31,556 40,737

Blue Star (UCP) 9,069 3,772 4,202 5,963 2,749 3,187 4,930 16,828 15,658 19,974 20,887 22,690 23,006

Symphony (Stand) 1,480 1,890 1,780 1,360 340 1,050 1,180 3,930 3,679 5,918 6,213 4,670 6,510

Havells-Lloyd 6,520 1,800 3,004 4,579 3,062 2,804 5,116 15,561 13,842 18,746 14,141 18,556 15,903

Johnson – Hitachi 9,519 3,766 4,360 4,329 2,696 3,101 4,875 15,001 16,405 19,173 21,854 22,413 21,974

V-Guard (Stab+

Inverter) 2,828 1,676 1,538 1,503 1,377 1,710 2,074 6,664 5,627 6,648 7,286 7,599 7,545

Total 46,904 18,159 20,889 29,723 17,294 17,568 26,571 91,156 80,421 100,927 102,642 107,483 115,675

Revenue Growth (%) 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 LTM FY16 FY17 FY18 FY19 FY20

Voltas (UCP) 47 19 14 20 (60) 9 40 6 2 21 6 (2) 29

Blue Star (UCP) 9 10 7 (15) (70) (16) 17 (15) 18 28 17 9 1

Symphony (Stand) 128 33 27 13 (77) (44) (34) (24) 20 21 5 (25) 39

Havells-Lloyd (8) (30) (16) (14) (53) 56 70 19 59 35 11 6 (14)

Johnson - Hitachi 20 9 0 (35) (72) (18) 12 (23) 6 17 14 3 (2)

V-Guard (Stab+

Inverter) 18 4 1 (27) (51) 2 35 (5) 3 18 14 6 (1)

Weighted Avg. Gr. 27 10 6 (3) (62) 3 33 (2) 17 24 11 2 10

EBIT Margin (%) 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 LTM FY16 FY17 FY18 FY19 FY20

Voltas (UCP) 13.1 8.8 10.1 14.6 15.5 11.0 12.5 13.6 13.4 14.5 14.7 10.3 12.6

Blue Star (UCP) 10.9 3.2 1.8 7.3 (1.4) 3.7 7.9 5.4 10.4 8.4 9.2 8.2 7.1

Symphony (Stand) 20.3 36.5 37.1 38.2 - 31.4 36.4 32.6 40.9 37.4 37.6 30.2 33.3

Havells-Lloyd 16.1 3.0 7.8 9.7 9.8 13.7 13.2 11.9

19.0 17.1 11.2

Johnson - Hitachi 10.3 (2.7) 4.0 2.4 (13.1) (7.4) 9.0 (0.3) 4.7 6.0 6.7 5.3 5.3

V-Guard (Stab+

Inverter) 17.5 16.9 15.9 14.1 6.8 17.9 24.7 16.9 13.6 13.0 10.9 12.5 16.4

EBIT Growth (%) 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 LTM FY16 FY17 FY18 FY19 FY20

Voltas (UCP) 54 67 36 69 (52) 36 72 7 (3) 30 8 (31) 57

Blue Star (UCP) 4 46 (19) (40) (104) (2) 407 (53) (0) 4 15 (4) (13)

Symphony (Stand) 2,900 50 29 126 (100) (52) (35) (26) 5 47 5 (48) 79

Havells-Lloyd (23) (89) (56) (44) (71) 612 206 (24) na na na 18 (44)

Johnson - Hitachi 35 90 (225) (84) (136) 129 149 (103) (24) 50 26 (18) (3)

V-Guard (Stab+

Inverter) 122 40 10 (30) (81) 8 110 (14) 33 13 (8) 19 30

Aggregate Gr. (%) 28 4 20 (8) (82) 2 77 (1) 28 9 (17) 12

Page | 4


Consumer Durables

ECD growth in 3QFY21 was robust, driven by increased economic activity, work-

from-home and pent-up demand. Categories like fans, SDAs and pumps led the

growth for the segment and most companies improved their product mix.

Commodity inflation-led price hikes also drove revenue growth. Over LTM, Havells,

Bajaj Electricals and Orient Electric were the top performers while TTK Prestige, IFB,

Whirlpool and Hawkins were the laggards.


Whirlpool 19,742 13,935 12,712 13,536 10,271 15,995 14,940 54,741 34,399 39,408 48,319 53,993 57,224

Bajaj Electricals 7,834 6,977 8,579 7,457 3,944 7,886 11,494 30,780 25,975 23,142 22,285 27,408 30,846

Crompton 10,729 7,881 7,870 7,411 5,965 9,317 10,359 33,052 25,714 28,817 28,281 32,136 33,890

Havells (ECD) 5,616 4,902 5,359 4,177 3,017 5,799 7,831 20,823 11,264 13,783 15,602 20,962 20,054

TTK Prestige 4,336 5,736 5,461 3,835 2,085 5,902 6,794 18,617 14,992 16,035 17,465 19,680 19,368

IFB (Home App) 5,655 5,859 5,761 3,807 2,493 5,886 7,679 19,865 12,290 14,742 18,104 20,897 21,081

Orient Electric 4,291 2,832 3,248 4,545 1,035 3,044 4,605 13,228 - - 12,181 13,296 14,916

V-Guard (CD) 1,534 1,750 2,020 1,441 855 1,634 2,641 6,571 4,999 5,085 5,738 6,779 6,745

Hawkins 1,421 1,926 1,933 1,460 1,008 1,932 2,311 6,710 5,713 5,398 5,526 6,528 7,347

Total 61,158 51,797 52,942 47,669 30,672 57,394 68,653 204,388 135,346 146,409 173,501 201,679 211,472

Revenue Growth(%) 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 LTM FY16 FY17 FY18 FY19 FY20

Whirlpool 20 18 5 (0) (48) 15 18 0 6 15 23 12 6

Bajaj Electricals 31 9 13 1 (50) 13 34 10 na (11) 6 23 13

Crompton 16 11 11 (14) (44) 18 32 4 na 11 5 16 5

Havells (ECD) 24 15 1 (14) (46) 18 46 13 11 22 21 30 6

TTK Prestige 4 4 (1) (14) (52) 3 24 1 10 8 15 16 (2)

IFB (Home App) 16 8 4 (25) (56) 0 33 1 20 20 23 15 1

Orient Electric 32 16 14 (4) (76) 7 42 9 na na na 9 12

V-Guard (CD) 15 (4) 10 (19) (44) (7) 31 1 19 737 16 20 (1)

Hawkins 18 12 11 (21) (29) 0 20 (2) 6 (6) 2 18 13

Weighted Avg. Gr. 20 12 7 (8) (48) 11 30 4 10 35 15 17 6


Whirlpool 15.2 10.5 7.8 9.4 3.2 10.9 6.3 7.8 8.9 10.2 9.5 9.8 9.5

Bajaj Electricals 7.0 5.1 8.2 6.4 2.7 10.7 12.5 9.3 4.6 4.3 4.9 6.6 6.8

Crompton 20.3 19.2 19.8 20.0 20.5 21.0 19.8 20.3 na 17.1 18.9 19.2 19.9

Havells 28.1 25.1 26.3 24.5 22.0 27.2 25.6 25.3 25.5 25.3 26.9 26.2 26.1

TTK Prestige 11.3 13.6 13.6 6.5 (0.2) 13.0 15.9 11.2 10.9 10.6 12.0 13.2 11.7

IFB (Home App) 2.3 6.0 2.1 (9.2) (14.2) 9.0 10.1 3.0 2.2 4.1 5.4 2.7 1.2

Orient Electric 10.1 9.3 12.4 15.8 (6.8) 16.8 14.9 13.9 na na 12.1 11.3 12.2

V-Guard (CD) 4.3 10.6 5.6 2.5 (10.2) 8.3 10.0 5.3 15.3 3.3 3.6 4.7 5.9

Hawkins 14.8 18.0 15.7 9.1 8.7 18.0 13.5 13.1 11.8 13.8 12.1 12.6 14.7


Whirlpool 19 22 1 (23) (89) 18 (6) (40) 17 31 14 16 2

Bajaj Electricals 30 (4) 28 4 (81) 138 104 50

(18) 10 66 16

Crompton 21 12 18 (12) (44) 29 31 0

9 15 9

Havells 11 (4) (0) (25) (58) 28 42 (6) 11 22 20 31 (5)

TTK Prestige (0) 5 (6) (56) (101) (2) 46 (21) 22 4 24 24 (13)

IFB (Home App) (12) 42 (39) na na na na (9) (41) 140 52 (41) (56)

Orient Electric 39 6 34 11 (116) 93 70 12

2 21

V-Guard (CD) 72 61 138 (70) (232) (26) 134 (16) 104 80 23 54 25

Hawkins 33 30 61 (37) (58) 1 3 (8) 37 10 (6) 23 21

Aggregate Gr. (%) 18 11 9 (25) (78) 29 50 30 20 15 19 3

Page | 5


Lighting & Fixtures

Lighting returned to growth in 3QFY21, after a weak 1HFY21, due to increased

construction activity. Price hikes, which began in 2QFY21, supported margin

expansion and most players saw healthy EBIT growth. Over LTM, Havells was the

top performer, limiting its revenue decline to 2%, while Orient struggled with a

revenue decline of 21%.


Havells 2,504 2,536 2,760 2,343 1,380 2,646 3,533 9,902 7,931 9,720 10,240 12,434 10,143

Crompton 2,739 2,877 2,843 2,853 1,236 2,815 3,123 10,026 10,145 11,296 12,770 12,653 11,312

Orient Electric 1,392 1,514 1,709 1,086 753 1,294 1,579 4,713 - - 4,074 5,348 5,702

Total 6,636 6,927 7,312 6,282 3,369 6,755 8,234 24,640 18,076 21,016 27,084 30,435 27,157


Havells 5 (2) (8) (31) (45) 4 28 (2) 8 23 13 16 (12)

Crompton (2) (11) (11) (17) (55) (2) 10 (9) - 11 20 4 (11)

Orient Electric 30 17 26 (33) (46) (15) (8) (21) - - - 31 7

Weighted Avg. Gr. 7 (2) (1) (25) (49) (2) 14 (9) 8 16 17 14 (7)


Havells 32.0 29.5 30.3 29.4 19.9 31.0 34.4 30.3 24.2 27.3 30.5 28.1 30.3

Crompton 5.1 5.2 6.9 7.7 6.1 11.7 12.3 10.0 na 8.8 11.5 8.4 6.2

Orient Electric 10.0 7.2 13.2 11.3 6.4 14.6 14.6 12.5 - - 8.5 11.0 10.5


Havells 13 (12) (13) (30) (66) 10 45 (14) (3) 38 18 12 (12)

Crompton (25) (27) (31) (44) (47) 119 96 4

47 (27) (34)

Orient Electric 22 30 56 (50) (65) 73 2 (7)

70 2

Aggregate Gr. (%) 7 (11) (9) (36) (63) 33 45 (3) 38 26 4 (15)

Page | 6


Cables & Wires

Cables & Wires saw growth in 3QFY21, following a weak 1HFY21 on the back of

revival in the real estate sector and resumption of projects/Capex put on hold during

the lockdown. Havells and V-Guard were the top performers in the segment during

3QFY21, and these companies also outperformed peers over LTM. Finolex struggled

in LTM, clocking a decline of 10%, although it saw strong growth in 3QFY21.


Polycab 19,330 22,419 25,073 21,294 9,766 21,137 27,988 80,185 52,024 55,001 67,703 91,459 88,116

KEI 8,549 9,983 10,995 10,332 6,463 8,707 9,899 35,400 19,112 22,372 27,265 39,271 39,859

Havells 7,785 8,213 7,121 6,823 4,611 7,847 9,052 28,333 21,866 23,793 26,001 32,098 29,942

V-Guard (Electricals) 2,632 2,768 2,709 2,422 1,827 2,823 3,559 10,630 8,078 9,409 10,126 11,660 10,530

Finolex 8,077 7,158 7,024 6,514 3,771 6,394 8,302 24,982 23,603 24,448 28,151 30,476 28,773

Total 46,373 50,541 52,921 47,385 26,438 46,907 58,799 179,529 124,683 135,024 159,246 187,901 197,404


Polycab 8 21 18 (12) (50) (5) 11 (7) 20 7 23 11 7

KEI 22 23 25 6 (24) (13) (10) (9) 12 17 22 23 19

Havells 4 7 (13) (24) (41) (4) 27 (5) 1 9 9 24 (7)

V-Guard (Electricals) 1 9 5 (32) (31) 2 31 (1) 8 (24) 12 12 (7)

Finolex 2 0 (6) (21) (53) (11) 18 (10) 0 4 15 9 (7)

Weighted Avg. Gr. 8 15 12 (12) (41) (7) 12 (7) 11 6 19 15 5


Polycab 11.4 10.5 11.9 15.2 3.0 13.9 12.8 10.8 7.4 7.1 10.0 11.8 12.3

KEI 10.4 10.4 12.0 11.2 11.6 12.8 12.6 12.1 11.7 12.0 10.8 10.9 11.1

Havells 16.5 18.4 17.5 12.3 12.2 17.4 15.2 14.6 14.2 13.7 16.8 16.1 16.3

V-Guard (Electricals) 5.0 10.2 7.7 7.9 3.0 9.4 8.8 7.8 6.9 9.5 7.5 7.4 7.7

Finolex 14.6 19.5 15.6 20.9 12.5 14.4 14.1 15.7 14.6 17.3 18.0 16.0 17.5


Polycab 27 15 (15) 36 (87) 26 19 (3) 16 2 61 30 11

KEI 22 24 28 9 (15) 7 (5) 6 14 19 10 24 20

Havells 0 41 (4) (47) (56) (10) 10 (27) 17 5 35 19 (6)

V-Guard (Electricals) (28) 82 35 (45) (58) (5) 50 (10) 34 4 (15) 11 (3)

Finolex (16) 50 (8) (3) (60) (34) 7 (24) 25 23 19 (3) 2

Aggregate Gr. (%) 6 31 (4) (1) (61) (0) 11 19 11 30 18 6

Page | 7


OEM

OEMs continued their momentum from 2QFY21 as Dixon clocked a robust 120% YoY

growth while Amber restricted its revenue decline to 3% YoY. The growth was

driven by acceleration in the momentum for Make-in-India as well as strong capacity

expansion by Dixon over the past few years.


Dixon 11,469 14,020 9,938 8,574 5,169 16,387 21,828 51,959 13,894 24,570 28,416 44,015 44,001

Amber 12,359 6,232 7,884 13,152 2,595 4,079 7,647 27,473 10,890 16,519 21,281 38,436 39,628

Total 23,829 20,252 17,822 21,726 7,764 20,467 29,475 79,431 24,784 41,089 49,697 82,452 83,629


Dixon 94 90 25 (0) (55) 17 120 50 - 10 16 77 16

Amber 75 89 52 10 (79) (35) (3) (9) - 26 (11) 51 29

Weighted Avg. Gr. 84 90 37 6 (63) 7 88 30 - 18 4 66 21


Dixon 3.9 3.9 4.2 5.2 1.5 4.8 4.1 3.3 3.5 3.3 3.4 3.8 4.2

Amber 7.8 2.5 4.2 6.1 (10.9) (0.4) 5.2 3.0 7.6 5.5 6.3 5.5 5.7


Dixon 112 98 26 44 (83) 43 114 5 83 67 20 17 65

Amber 127 (1,231) 151 (17) (129) (110) 20 (63)

9 49 12 49

Aggregate Gr. (%) 122 166 61 (2) (115) 9 73 83 30 35 14 56

Source: Companies, HSIE Research

Page | 8


HSIE CD Index - Revenue Growth (Ex-OEM and Project

Business)

HSIE CD Index - EBIT Growth (Ex-OEM and Project

Business)


Cooling Products - Revenue Growth Cooling Products - EBIT Growth


Consumer Durables - Revenue Growth Consumer Durables - EBIT Growth


22

45

31 33

42

10 17

11 7

(12)

(52)

1

21 27

13 15 14

5

(60)

(40)

(20)

-

20

40

60

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

2QF

Y21

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

35

65

39

9

32

(6)

17 16

3

(14)

(74)

15

38

15

37 29

9 4

(100)

(80)

(60)

(40)

(20)

-

20

40

60

80

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

2QF

Y21

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

30

5

(2)

3 10

2

27

10 6

(3)

(62)

3

33

17 24

11

2 10

(80)

(60)

(40)

(20)

-

20

40

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

2QF

Y21

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

51

4 10

(34)(29)(25)

28

4

20

(8)

(82)

2

77

(1)

28

9

(17)

12

(100)

(80)

(60)

(40)

(20)

-

20

40

60

80

100

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

2QF

Y21

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

16 19

23

14

26

10

20

12 7

(8)

(48)

11

30

10

35

15 17

6

(60)

(50)

(40)

(30)

(20)

(10)

-

10

20

30

40

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

2QF

Y21

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

19 26

46

12 18

3

18 11 9

(25)

(78)

29

50

30 20

15 19

3

(100)

(80)

(60)

(40)

(20)

-

20

40

60

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

2QF

Y21

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

Page | 9


Lighting & Fixtures - Revenue Growth Lighting & Fixtures - EBIT Growth


Cables & Wires - Revenue Growth Cables & Wires - EBIT Growth


OEM - Revenue Growth OEM - EBIT Growth


19 17 22

10 12

20

7

(2) (1)

(25)

(49)

(2)

14

8

16 17 14

(7)

(60)

(50)

(40)

(30)

(20)

(10)

-

10

20

30

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

2QF

Y21

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

21

47

15

(7)

2 10 7

(11) (9)

(36)

(63)

33

45

(3)

38

26

4

(15)

(80)

(60)

(40)

(20)

-

20

40

60

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

2QF

Y21

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

12 15 16

24 22

14 8

15 12

(12)

(41)

(7)

12 11 6

19 15

5

(50)

(40)

(30)

(20)

(10)

-

10

20

30

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

2QF

Y21

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

21 22 23

(15)

16

(4)

6

31

(4) (1)

(61)

(0)

11 19

11

30

18

6

(80)

(60)

(40)

(20)

-

20

40

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y2

0

2QF

Y2

0

3QF

Y2

0

4QF

Y2

0

1QF

Y2

1

2QF

Y21

3QF

Y2

1

FY

16

FY

17

FY

18

FY

19

FY

20

(21)

5 1

(3)

31

61

84 90

37

6

(63)

7

88

4

66

21 17

46

(80)

(60)

(40)

(20)

-

20

40

60

80

100

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y2

0

2QF

Y2

0

3QF

Y2

0

4QF

Y2

0

1QF

Y2

1

2QF

Y2

1

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

(46)

26

(1)

(38)

31

61

122

166

61

(2)

(115)

9

73 83

30 35 14

56

(150)

(100)

(50)

-

50

100

150

200

3Q F

Y18

4Q F

Y18

1Q F

Y19

2Q F

Y19

3Q F

Y19

4Q F

Y19

1QF

Y2

0

2QF

Y2

0

3QF

Y2

0

4QF

Y2

0

1QF

Y2

1

2QF

Y2

1

3QF

Y21

FY

16

FY

17

FY

18

FY

19

FY

20

Page | 10


Valuation trend

The sector is trading at 46x P/E (one-year forward), having seen a sharp re-rating in

the past 10 years (20x in 2010). We believe category winners will further gain

market share in the current phase and command valuation premiums. Although

earnings can be volatile in the near term, rich valuations would sustain, in our

view. Further, category winners hold the potential for quick turnarounds;

therefore, the near-term disruption offers a good entry point.

Sector P/E (12-month Rolling Forward) CD Universe: Earnings vs. Valuation

Source: Companies, Bloomberg, HSIE Research Source: Companies, Bloomberg, HSIE Research

CD universe: profit mix CD universe: market cap mix

Source: Companies, Bloomberg, HSIE Research Source: Companies, Bloomberg, HSIE Research

Havells,

23%

Polycab,

18%

Whirlpool,

8%

Voltas, 11%

Crompton,

12%

V-Guard,

4%

TTK , 5%

Dixon, 4%

Blue Star,

2%

Symphony,

2%

Amber, 2%

Orient Ele,

2%

Hitachi, 1% Bajaj Elec,

3%

IFB, 2%

Havells,

26%

Polycab, 7%

Whirlpool,

11%Voltas, 12%

Crompton,

9%

V-Guard,

4%

TTK , 4%

Dixon, 8%

Blue Star,

3%

Symphony,

3%

Amber, 4%

Orient Ele,

2%

Hitachi, 2% Bajaj Elec,

4%

IFB, 2%

0x

5x

10x

15x

20x

25x

30x

35x

40x

45x

50x

-40

-20

0

20

40

60

80

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20

FY

21

E

EPS Gr (%) P/E (x)(%)

15

23

31

39

47

55

Feb-11 Feb-13 Feb-15 Feb-17 Feb-19 Feb-21

Appliance Sector P/E (x) 10 Years' Avg P/E (x)

5 Years' Avg P/E (x) 3 Years' Avg P/E (x)

Current

P/E: 46x

Page | 11


FMCG Universe: Valuation Trend

P/E (x) 10 Yr Avg 5 Yr Avg 3 Yr Avg Current 10 Yr Avg 5 Yr Avg 3 Yr Avg

Havells 33 44 47 58 76% 33% 24%

Voltas 26 32 37 43 70% 35% 18%

Crompton na 35 33 39 na 11% 17%

Symphony 41 58 58 41 -2% -30% -30%

V-Guard 31 44 46 38 22% -13% -17%

TTK Prestige 37 40 39 38 3% -4% -2%

Blue Star 18 43 47 43 136% -1% -10%

Orient Electric na na 40 43 na na 7%

Whirlpool 35 47 53 52 48% 11% -1%

IFB Industries 40 56 66 35 -13% -38% -47%

Johnson-Hitachi 51 64 72 58 14% -10% -20%

Dixon na na 37 73 na na 94%

Amber na na 31 50 na na 59%

Hawkins 29 28 26 32 12% 17% 24%

Polycab na na 16 24 na na 55%

Appliances 31 36 40 42 36% 17% 5%

Nifty-50 18 21 22 28 57% 37% 28%

Consumer Durables Universe: Stock Performance

Companies 1W (%) 1M (%) 3M (%) 6M (%) 12M (%) 3Yr (%) 5Yr (%)

Havells India (7.5) 0.2 37.9 72.2 79.4 121.5 315.2

Whirlpool (2.2) (10.2) 10.6 8.9 6.8 70.1 296.5

Voltas (2.2) 8.7 34.7 53.1 41.4 72.4 354.0

Crompton (3.9) (11.1) 23.8 43.6 32.8 64.1 N/A

Polycab 1.4 5.2 45.1 47.3 23.6 N/A N/A

Dixon 3.4 36.6 76.4 123.4 366.7 485.7 N/A

TTK Prestige (4.4) 17.3 20.1 20.2 20.8 18.6 102.7

V-Guard Industries 5.3 0.2 29.9 31.6 15.7 (1.4) 297.7

Finolex Cables 0.7 (0.8) 28.6 28.6 7.2 (45.8) 60.8

Blue Star 2.0 9.9 8.1 21.6 0.9 12.9 162.2

Amber (3.8) 24.1 42.6 71.8 99.5 N/A N/A

Johnson-Hitachi 1.3 (1.6) 16.1 9.2 (10.6) 12.1 155.0

Symphony (0.2) 6.0 26.2 15.0 (22.6) (37.1) 7.6

Bajaj Electric (8.1) 27.3 74.1 84.1 133.7 96.2 521.1

Orient Electric (5.1) 4.2 16.0 31.7 3.8 N/A N/A

KEI Industries (0.3) (0.5) 27.0 24.9 0.3 36.0 457.2

Hawkins (1.7) (3.3) 8.0 12.0 7.7 95.7 125.5

IFB Industries (3.5) (10.5) 63.6 143.9 145.8 (10.9) 335.9

La Opala 2.4 (1.3) (4.7) (4.9) 5.6 (31.5) (23.2)

Surya Roshni (4.8) (5.6) 35.4 93.4 123.3 (21.0) 184.3

Butterfly (7.3) 12.6 42.4 177.8 192.5 12.1 229.8

BSE Consumer Durables Index (2.4) 1.9 20.7 34.3 17.5 50.6 180.1

Nifty 50 (4.0) 2.3 14.4 27.2 24.3 40.2 111.0

Note: As on 23rd Feb, 2021

Green indicates out-performance to Nifty 50 during the respective period

Red indicates under-performance to Nifty 50 during the respective period

Page | 12


Peer Set Comparison

Company Mcap

(Rs bn)

CMP

(Rs/sh) Reco TP

EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)

FY21E/

CY20E

FY22E/

CY21E

FY23E/

CY22E

FY21E/

CY20E

FY22E/

CY21E

FY23E/

CY22E

FY21E/

CY20E

FY22E/

CY21E

FY23E/

CY22E

FY21E/

CY20E

FY22E/

CY21E

FY23E/

CY22E

Havells 716 1,146 ADD 1,150 16.6 19.5 22.8 68.9 58.7 50.4 45.8 38.8 33.8 29.1 33.2 37.3

Voltas 336 1,016 BUY 1,100 15.3 24.3 28.6 66.4 41.8 35.5 57.3 34.9 24.9 18.8 28.4 35.4

Crompton 239 382 BUY 460 8.1 10.1 11.5 46.9 37.8 33.4 34.1 28.0 24.8 41.4 46.4 48.3

V-Guard 98 230 ADD 255 4.6 6.2 7.2 50.4 36.9 31.9 33.6 26.3 23.0 20.3 26.3 28.1

Symphony 73 1,046 ADD 1,115 15.8 26.9 31.9 66.1 38.9 32.8 49.2 28.5 25.0 23.5 43.0 49.3

TTK Prestige 98 7,045 ADD 7,850 153.1 187.5 206.6 46.0 37.6 34.1 30.6 24.7 21.9 22.5 26.3 26.6

Source: Company, HSIE Research CMP is of 24 Feb

Consumer Durables - P/E Bands

Havells P/E Band Voltas P/E Band Crompton P/E Band

Symphony P/E Band V-Guard P/E Band TTK Prestige P/E Band

Source: Bloomberg, Companies, HSIE Research

10.x

24.x

38.x

52.x

66.x

Feb

-11

Feb

-12

Feb

-13

Feb

-14

Feb

-15

Feb

-16

Feb

-17

Feb

-18

Feb

-19

Feb

-20

Feb

-21

P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E

10.x

24.x

38.x

52.x

66.x

Feb

-11

Feb

-12

Feb

-13

Feb

-14

Feb

-15

Feb

-16

Feb

-17

Feb

-18

Feb

-19

Feb

-20

Feb

-21


20.x

30.x

40.x

50.x

60.x

Au

g-1

6

Feb

-17

Au

g-1

7

Feb

-18

Au

g-1

8

Feb

-19

Au

g-1

9

Feb

-20

Au

g-2

0

Feb

-21

P/E 3 Yr Avg P/E5 Yr Avg P/E

0.x

40.x

80.x

120.x

Feb

-11

Feb

-12

Feb

-13

Feb

-14

Feb

-15

Feb

-16

Feb

-17

Feb

-18

Feb

-19

Feb

-20

Feb

-21


0.x

11.x

22.x

33.x

44.x

55.x

66.x

Feb

-11

Feb

-12

Feb

-13

Feb

-14

Feb

-15

Feb

-16

Feb

-17

Feb

-18

Feb

-19

Feb

-20

Feb

-21


0.x

12.x

24.x

36.x

48.x

60.x

Feb

-11

Feb

-12

Feb

-13

Feb

-14

Feb

-15

Feb

-16

Feb

-17

Feb

-18

Feb

-19

Feb

-20

Feb

-21


Page | 13


3QFY21 ConCall Key Takeaways Company Industry/Co Strategy Revenue Margins

Havells - Consumer and residential portfolio

continued momentum from 2QFY21. Infra

and industrial portfolio saw decent

recovery.

- Last few days of December saw some pre-

buying owing to low channel inventory and

expectation of price hikes.

- Price increases have varied across

categories depending on the impact from

commodity prices.

- Demand is not expected to be impacted

significantly due to price hikes.

- Retail demand has remained healthy and

in line with company growth over the last 6

months excluding the pre-buying in

December.

- Rural revenue has been growing at

>100% for Havells due to strong

momentum in rural demand as well as the

improved distribution network.

- Urban demand has also seen recovery and

co expects it to keep improving over the

next few months.

- Rural and Online are contributing ~12%

of revenue within the residential

portfolio.

- Completion of projects started earlier

drove demand along with new real estate

projects. Improved consumer sentiments

also aided growth.

- Co intends to use its available cash for

capacity expansion over the next few years.

It is also open to acquisitions but cash will

be used primarily to back its strategy of

ramping up production.

- Co does not believe pent up demand

played a significant role in the growth in

3QFY21. However, co is uncertain about the

sustainability of the growth witnessed.

- Co believes India has seen a consistent

shift in consumer preferences from

unorganized to organized sector and that

trend is expected to sustain.

- Make-in-India will also benefit Indian

brands and market share of Chinese players

is expected to reduce.

- PLI will help the industry and company

in terms of driving export revenues

significantly over the next few years.

- ECD business was benefitted by festive demand, distribution

expansion, housing activities and market share gain.

- Copper related products saw price hike of 15% in 3QFY21 and

further hikes are expected in 4QFY21.

- Industrial and infra demand has seen improvement for wires.

- If commodity inflation sustains at the current level, all categories

in ECD will see double digit price hikes. Right now, the co expects

price hikes of 5-13% across categories.

- Domestic Appliances did well led by distribution expansion and

festive demand.

- Co retained its leadership in Water Heaters and saw strong growth

despite a high base.

- Growth in fans was healthy throughout the quarter. Pre-buying also

supported growth in December. Co believes the growth was visible

across the industry.

- Co will enter manufacturing for CD depending on the volume

growth. It now has a completed CD portfolio including small

appliances and dishwashers.

- Domestic switchgears saw price hikes of 5-7% while industrial

switchgear and motors saw price increase of >10%.

- Growth in Lighting has been driven entirely by B-C segment.

- B-B Lighting has continued to struggle and recovery is expected to

be gradual.

- Growth over the past six months has been led by retail demand

and not inventory build-up, barring the pre-buying during the last

few days of December.

- Increased momentum for Make-in-India has seen a shift in

consumer preference.

- Stronger and quality oriented brands are gaining market share from

marginal and unorganized players.

- Co intends to pursue global markets with its RACs and it is

exploring alternatives to grow its presence in the international

market.

- Lloyd saw structural changes during 3QFY21. Real estate sector,

which was tepid for the last 2 years, saw strong demand.

- Import prohibitions for RAC aided market share gains for Lloyd.

- Lloyd also partially benefitted by pre-buying, its recovery is pretty

steady with ease out of lockdown.

- Channel partners confidence is improving and supporting

- Co has good control on Lloyd product range, manufacturing and

cost. Operating margin will be healthy.

- Commodity prices have seen sharp

inflation over the last 2 months and

the impact from that is yet to be

reflected.

- 3QFY21 saw normalized levels of

Employee costs and increments have

come in. Hence, no major increase

expected.

- Co will target maintaining the

current contribution margins.

Commodity inflation is expected to

have only a short-term impact.

- Ad spends on absolute terms have

started coming back. As a % of sales,

it will be lower due to revenue

growth.

Page | 14


Company Industry/Co Strategy Revenue Margins

Voltas - Co has accelerated the rollout of brand

outlets and the distribution for Voltas as

well as Volt-Beko continues to expand.

- The board has approved transfer of all

domestic projects to a wholly owned

subsidiary. Purchase consideration was Rs

10-12bn and the transfer will be completed

by Sep-21.

- The purpose of transferring the business is

to ensure proper focus on both the B-B and

B-C verticals.

- International B-B business continues to

remain with the parent company.

- Co does not expect a sizeable inflow from

the PLI scheme. Co believes that the PLI

scheme will have some reference to exports

but it will not alter the market significantly

like mobile phones.

- Borrowings remained minimal and were

entirely for overseas operations.

UCP

- Pent up demand led to accelerated inventory build-up by channel

partners.

- Co’s focus on Inverter paid dividends as inverters grew by 75%

YoY. They now contribute 60% of all RACs sold vs 49% YoY, and co’s

market share in the segment has reached 21.8%.

- Supply chain for components like compressors is not established

in India and hence, co intends to ramp up its own production

capacity in India and reduce import reliance

- Improved relationships with B-B partners, channel expansion and

revival of demand from OEMs drove the growth in commercial

refrigeration.

- Increased number of variants, favourable trade schemes and a

wide distribution network aided the strong growth in Air Coolers

despite a challenging market.

- Voltas is the number 2 player in Air Cooler with market share for

13.2%

Volt-Beko

- Factory has completed first year of productions. Factory produced

2.1lac units of DC refrigerator during the year despite disruptions

and supply constraints.

- Co has made plans to begin manufacturing FF refrigerators, top

load and fully automatic washing machines as dishwashers over the

next few months.

- Co is currently facing a supply constraint as it is not able to

produce as much as the demand and hence, it intends to expand its

production capacity.

- It wants to be able to sufficiently service the 6,000 retail touchpoints.

- Pricing in Volt-Beko has been similar to the RAC line-up in Voltas.

EMPS

- Revenue recognition improved due to faster execution and

improvement in liquidity conditions.

- The overall order book stood at Rs 73bn vs Rs 70bn YoY.

Domestic order book was Rs 4.8bn, while International order book

stood at Rs 2.4bn.

- Fresh order worth of Rs 7bn added across both domestic and

international market.

- Co saw fresh orders across categories in the domestic as well as

international segment.

- Within domestic, metros, water-related projects and other

infrastructure projects saw good momentum and the increased

allocation towards infrastructure in the budget will aid growth going

forward.

UCP

- Margin expansion was driven by an

improved product mix and coupled

with lower holding cost of carry

forward inventories.

- Co believes a 5-6% price hike in

RAC will be sufficient. However,

sustained commodity inflation

could drive it higher.

- Co’s focus will continue to remain

on balancing market share gains and

margins and hence, it will not take

excessive price hikes or delay them.

- Co does not want to continue to

import as it is not economically and

profitably sustainable over a long

term due to custom duties and

commodity inflation.

EMPS

- Co does not record margins in

EMPS until a project crosses the 20%

completion threshold.

- Co aims to achieve 6-7% EBIT

margin on sustainable basis for

EMPS.

Page | 15



Crompton - Capacity utilisation is 30-40% higher than

last year

- Secondary data indicates no significant

built-up of trade inventory despite pre-

buying at the end of the quarter.

- Supply chain has become better than pre-

covid level for the company

- Co's productivity has improved in the last

3 months

- Co is implementing several initiatives

(product, distribution, working capital)

which will continue to benefit.

- Growth was strong in E-comm and MT at

53% YoY. Co remains focused on

improving its presence in E-comm and MT.

- Rural sales grew by 88% YoY in 3QFY21.

Co is continuously investing behind

improving its distribution reach as well as

increasing the number of retail outlets

they are present in. Fans retail presence

increased by 3%.

- Co targeted expanding reach to 400 towns

with population of 50,000-100,000. Co has

completed 75% of its target. It is also

targeting expanding reach to 2,000 towns

with population of 25,000-50,000.

- October/November/December all saw

growth of >20% YoY.

- Cash stood at Rs 12.4bn, even after

payment of interim dividend in 2QFY21.

ECD

- Fans grew by 36% YoY while Premium fans grew by 51% YoY.

Premium fans contribute 17-18% of fans.

- In the last 12 months, co gained 1% market share in fans. It is the

brand that has grown the most over this period. Other big players

have not seen any significant share gain.

- Fans market grew by 9% YoY in Oct-Nov, although overall growth

in the last 12 months is negative. Retail trends within real estate have

sustained growth within the industry.

- Pumps saw 19% YoY growth with Residential pumps clocking

23/25% YoY Volume/Value growth. Geysers saw value growth of

49% YoY.

- Co continued to gain market share across categories within

Appliances.

- Innovation within Fans and Appliances has been consistent and co

has made several new launches during the quarter.

- Co expanded its Pumps portfolio with multiple new launches

during 3QFY21.

- Co is now shifting its focus towards SDA starting with mixers.

- Co has focused largely on the ceiling variants and launched several

new variants.

- Farmer agitation has temporarily impacted supply chain in North

region.

LIGHTING

- B-C LED Lighting saw 13% YoY growth in value and volume as

prices remained stable.

- Conventional lighting declined by 17% YoY, but remained a

significant part of the lighting portfolio (15% mix).

- Several players have announced 5% price hikes within B-C LED and

Crompton will also take price hikes. However, co does not expect

volume growth to be impacted.

- B-B remained a laggard due to slow order inflow from institutions.

- Lighting sustained mid-teens volume growth in the last 3-4

quarters. Price erosion was impacting value growth which has

become driver for the growth.

- Clarity on PLI is awaited

- Rural initiatives will drive the growth in the coming years.

- Commodity cost headwinds

impacted gross margins. Cost

inflation has also impacted 3Q, but

large pressure will be in 4Q.

- Inflation in commodity costs is

unprecedented and co has taken

corrective actions like price hikes,

improved sourcing strategy and

accelerated cost savings programs.

- Co has taken price increase of 5-

8% across ECD in 3QFY21 in

response to commodity inflation.

Co intends to restore margins to the

industry leading levels within this

segment.

- Price improvement in B-C LED

sustained strong margins with

EBITDAM of 12.3%.

- Co effected increments for

employees from October 2020.

- Co saved approx. Rs 400mn in its

cost saving initiatives in 3QFY21.

Page | 16



V-Guard - Factories are working at normal efficiency

now. Operations on the ground have also

returned to normal.

- Co saw encouraging momentum going

into 4QFY21 and expects market share

gains. 4QFY21 is expected to be strong

YoY.

- Co saw benefit of pre-buying due to

expected price hikes in Jan-21.

- Secondary sales have been favourable and

replenishment of inventory also aided co as

secondary sales were ahead of primary in

2QFY21.

- Overall channel inventory is healthy.

Stabilizer inventory might be slightly

higher, mainly due to pre-buying for the

season. Inventory is very low for kitchen

appliances and water heaters.

- Lower interest rates have driven real

estate revival which has resulted in

improved demand for co.

- Co does not intend to enter any new

categories in the near term and new

launches will be limited to a few variants

within fans and expansion of markets for

kitchen appliances.

- Operating CF in 3QFY21 was Rs 450mn vs

Rs 600mn in 3QFY20.

- 10% of sale value used to be imported

products 5 years ago. It stands at 5% and it

can go down to 1% over the next few years.

- Electronic materials used as RM worth Rs

400-500mn are imported every year. Co is

gradually moving towards Indian vendors.

However, there are no sources in India for

some of the electronics.

- Currently, total retail touchpoints are

40,000. 18,000 are in south and balance in

non-south.

- MT and e-com revenue mix is 12-15%

excluding wires and cables.

- Co will focus more on scaling up the

existing portfolio rather entry into newer

categories.

- Co’s preferred cash deployment is

through favourable acquisitions. If it is

unable to identify such opportunities, it

will return cash to shareholders via

dividend or buybacks.

- Further acquisitions are likely to be in

areas where co intends to strengthen its

presence, primarily durables.

- Net cash position improved to Rs 4.8bn

vs Rs 3.2bn YoY.

- Summer products are expected to witness strong traction in

summer 2021 aided by pent up demand. However, it could

materialize in 4QFY21 or 1QFY22.

- Inverters and stabilizers were heavily impacted due to the

lockdown and hence, pent up demand is expected to drive strong

growth.

- Categories like cables which were not impacted as adversely as

seasonal categories in FY21 have recouped their losses and are

expected to sustain strong growth.

- Modular switches have seen strong growth but demand is ahead of

supply due to supply constraints.

- Fans saw very strong traction following easing of restrictions.

- Co has shortages in fans due to lack of functionality for suppliers,

modular switches and switchgear due to raw material availability

issues. Mixers have been impacted by low production rates for

suppliers.

- Non south can reach around 50% revenue mix in the medium term.

- Co intends to focus on driving premiumisation and improve its

product and category mix.

- Larger cos are outperforming smaller cos due to supply chain

constraints.

- The transition from unorganised to organised is expected to be

sustainable this time unlike demonetization or GST.

- Co started manufacturing water heaters last year and it is sourcing

almost entirety of water heaters locally now. It is looking at

undertaking production for more categories over the next few

years. A product with minimum revenue size of Rs 1.5-2bn will

make it viable for manufacturing for V-Guard.

- It is also investing behind improving its presence in e-comm and

MT where V-Guard does not have strong presence.

- Distribution reach through modern channels as well as GT will

be the key focus area over the next few years. Co will gradually

increase its reach in non-south markets where penetration is lower

than south. It has added around 5,000 distributors on a yearly basis

for the last few years, mainly in non-south markets.

- GM was impacted by sudden

inflation in commodities and co is

taking suitable pricing actions.

- Average copper price was up 15-

20% up YoY in 3QFY21, co entirely

passed on wires through price hikes

in 3QFY21. Other categories saw an

average price hike of 3-3.5% in

3QFY21.

- V-Guard expects to take further

hikes in 4QFY21. Price hikes could

be 4-7% depending on commodity

inflation.

- Commodity inflation is expected to

last over the next 6-7 months leading

to price hikes. After that period,

margins are expected to improve.

- 4QFY21 EBITDA margin will be

close to what company has achieved

in 4QFY19 (around 10.5%). As

4QFY20 margin was impacted by

lockdown.

- Co intends to improve EBITDAM

by 100bps in every 2 years.

Page | 17



Symphony - Current trade inventory is likely to have

increased since September as a result of

purchasing from the company. However,

trade inventory is currently in-line YoY

(even slightly lower).

- Inventory has improved from Rs 1,050mn

to Rs 950mn at a consolidated level.

Standalone inventory stands at Rs 350mn.

- Trade collection in Dec-20 was even

higher compared to last year.

- Supply chain disruptions have impacted

domestic operations adversely during the

year. Co has also struggled with sourcing

input materials due to the farmer

agitations. However, there has not been any

significant loss of sales.

- Trade sentiment across geographies is

positive.

- Part of the sourcing that used to happen

from Australia and China for CT will

instead be sourced from suppliers based in

India from FY22 onwards.

Domestic

- Some SKUs were even stocked-out and will benefit 4QFY21. Co

expects normalcy from 4Q onwards

- Market potential is strong and trade sentiments are high.

Collections are very strong.

- Co gave its price increase indication very late to trade partners and

hence, there was no significant pre-buying in 3QFY21.

- Pent up demand is possible in the upcoming season, will get more

clarity in 1-2 months.

- Co expects early onset of summer this season, Feb should be hot

month

- Standalone sales in FY22 will be atleast at par to FY20 (Rs 7.1bn)

- Wedding season also supported liquidating some trade inventory.

- Many players are witnessing supply constraints, including

organised player. There is good possibility of market share gain in

the upcoming season.

Exports and Subsidiaries

- Exports were mainly impacted by delay in shipment, it will bunch

up in 4QFY21

- CT revenue is up 1% YoY in 9M. However, EBITDA has been

impacted due to local buying instead of imports as well as substantial

increase in freight and labour cost. Co has taken several initiatives to

correct the same and expects 4QFY21 to be turnaround quarter.

Supply from India will also support margin.

- IMPCO Mexico has seen sales impact due to COVID-19. However,

gross and contribution margin has seen improvement. EBITDA has

been impacted due to provision of Rs 73mn as a result of the

bankruptcy of a major vendor.

- GSK also saw improvement in margin, although sales remained

under pressure.

- Plastic and metals saw significant

inflation. However, price increase,

new launches and improved product

mix will lead to co maintaining its

GM.

- Co also enjoyed the benefit of

operating efficiencies due to

initiatives taken in 1HFY21.

TTK Prestige - Overall positive demand sentiments, all

markets and channels are growing well.

- Demand momentum is currently good for

the industry and the shift towards known

brands has continued. Co believes the

market will continue to grow.

- Co saw significant market share gains

since 2QFY21.

- Channel inventory is currently at normal

levels (less than 1 month).

- Impact of WFH led home and kitchen

improvement is expected to continue in the

medium term.

- Working capital is currently at the lowest.

Receivables have seen improvement in

3QFY21 vs 2QFY21.

- Products whose production was not

moved from China to India led to a loss of

revenue of Rs 200-300mn during the

quarter. The surge in demand combined

with interruptions in imports led to the

loss of sales. It will not repeat in the

future.

- E-comm mix was at 16%, which is lower

than 1HFY21. The channel clocked 50-60%

YoY growth and it could have been higher

if co had focused its supplies on the

channel.

- Co did not want to expand e-comm at the

cost of other channels and, hence, supply

was maintained to all channels.

- Festive sales were strong across categories. New launches

performed well for the co.

- Volume growth was healthy double digits (~18%).

- Price hike was 9% in 3Q which the company took in two tranches.

No price hike taken in Jan month.

- Co has performed well in cookers, cookware, cooktops and gas

stoves. Kitchen hobs and rice cookers can see improvement, but

lower growth was primarily on account of supply chain disruptions.

- MFI channel opened in a delayed manner and it is gradually

recovering. MFI contribution pre-COVID was 4-5%, and it has

remained similar. Regular rural channel has posted healthy growth.

- Non-south mix ranges between 48-52% depending on the quarter.

- Growth in rural areas and smaller towns has been ahead of urban

in FY21.

- Co has entered casseroles which are expected to contribute Rs 300-

400mn in annual revenue over the next 7-8 months.

- Co also entered stainless steel cookware which is a Rs 2bn market.

Entry into categories like dishwashers and chimneys is a pilot

project in order to test driving premiumisation through these

categories.

- Cooktops growth was strong in 3Q

- Co has passed on all RM inflation

and, hence, margin has not been

impacted significantly by it.

- Weighted average price in 3QFY21

was 9%, taken across 2 tranches.

Most of this hike was towards the

end of the quarter. Co does not

expect any further price hikes in

4QFY21.

- Price hike in pressure cookers and

cookware was 5%, 20% in

appliances like mixers and 10% in

gas stoves. Hike has been taken

based on input cost inflation.

- Product channel mix impacts

margin significantly and it has

remained stable in Jan.

- GM at product level has remained

healthy.

- Premiumisation trend continued

across categories.

- Co has not cut any costs drastically

and the EBITDA margin expansion

has been driven through revenue

growth.

Page | 18


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