Pickup in demand for consumer durables likely in the second half of FY26

HDFC Institutional Equities’ Research Analyst (Strategy), Aryan Singh Dalal, shares his views on the consumer durables sector.

Consumer durables stocks are sensitive to economic cycles to some extent. With the risk of economic slowdown exacerbating further, what is your outlook for this sector for the next one year.

Consumer durables demand has been subdued over the past few quarters. However, we anticipate a pickup in demand from H2FY26. This expected recovery is likely to be aided by a combination of factors: a lower income tax rate for middle-class individuals, potential interest rate cuts, and healthy real estate sales in the post-COVID environment.

 Which are the companies that you think may outperform, in this sector?

Crompton consumer stock has corrected steeply in last few months. We anticipate a weak H1FY26 for the company, primarily due to a mild summer impacting its crucial fan sales. However, at its current valuation, the risk-reward profile appears favourable.

 Consumer durable stocks are among the most valued stocks currently in Indian markets. Stocks of consumer durable companies are currently trading at an average P/E ratio of around 70 at NSE. What is the reason for this high valuation?

BSE Consumer durable sector index is trading at 1 year forward PE of 34x, marginal premium to 5-year average. Consumer durable stocks generally command favorable valuations in the market. This is primarily attributed to the high growth potential within the sector, driven by lower penetration levels of key products such as AC, air cooler, wires, and cables across India.

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Source: HDFC Securities Institutional Equities