Consumer Durable Stocks In India: A few centuries ago, people did everything by themselves – From foraging food to washing their clothes and even making their own clothes!
Imagine having to find the linen that went into your shirt, that you had to stitch yourself. The concept of refrigerating food still didn’t exist so you couldn’t store anything that had a short shelf life.
Fast forward to the 21st century, our appliances make life a time-saving wonder. We’re talking about the water purifier to keep you hydrated, and the vacuum cleaner that keeps your floor dust-free.
Anything you need to be washed, cleaned, cooked, or fixed, all at the push of a button. All these types of appliances are categorized as consumer durables. This article covers the top consumer durable stocks in India.
What Are Consumer Durables?
Consumer durables is a broadly used term for our daily use appliances. This means appliances such as air conditioners, computers, refrigerators, blenders, televisions, and dishwashers.
Such devices are expected to have a long shelf life, given their daily dependence by consumers.
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Consumer Durable Sector In India
The industry of consumer electronics and appliances is valued at around $9.8 billion dollars (IBEF, 2021). It’s expected to grow to over twice that size by 2025.
Just the refrigerator, washing machine, and air conditioner market are valued at $3.82 billion, $8.4 billion, and $3.8 billion respectively. Keep in mind that these figures are just for three products within the consumer durables industry.
A boost to the entire industry is the Indian government’s “Make In India” initiative, which plans to bring manufacturers to Indian shores, bringing the cost of appliances down, all the while increasing employment opportunities for skilled workers.
Consumer Durable Stocks In India – Table
|S. No.||Company Name||Market Cap (Rs. In Cr.)||CMP|
|13||Johnson Controls Hitachi Air Conditioning||2911.61||1070.85|
Voltas is one of the biggest consumer durables companies in India. They have an industry presence of over sixty years in cooling systems. The company is owned by the Indian conglomerate, Tata Sons.
The company has a wide range of consumer durables that they sell under the “Voltas” brand. This includes air conditioners, refrigerators, air coolers, water coolers, microwave ovens, and dishwashers.
Financial Performance Of Voltas –
|CMP||₹ 770||Market Cap (Cr.)||₹ 25,483 Cr.|
|EPS||₹ 11.5||Stock P/E||145|
|Face Value||₹ 1.00||Book Value||₹ 169|
|Promoter Holding||30.3%||Price to Book Value||4.56|
|Debt to Equity||0.07||Dividend Yield||0.74 %|
|Net Profit Margin||6.39 %||Operating Profit Margin||6.38 %|
Voltas is a large-cap consumer durables company, having a market capitalization of ₹25,483 crores. For the financial year ending 2022, they made sales of ₹7,934 crores. This was the highest sales the company made in the last ten years.
The company has been profitable, however, they have not followed the same growth trend as sales. The operating profit margin of the company has fallen over the years from 10 percent in 2018 to 7 percent in 2022.
With sales of ₹6,404 crores, the company made a net profit of ₹578 crores in FY 2018. But, in 2022, the company’s profits were ₹506 crores, from sales of ₹7,934 crores.
This shows an indication of slight growth in revenues, but not in profitability. The company’s ROE(9.62 percent) and ROCE(13 percent) are also below expectations.
Voltas has managed to remain debt free, with a D/E ratio of 0.07. Shareholding shows that promoters of Voltas, Tata Sons, own 30.3 percent of the company, with no major developments.
The 5-year returns of Voltas, although positive, are quite low, at just 35.2 percent.
2. Whirlpool Of India
We can’t write about consumer durable stocks in India without mentioning Whirlpool. The company is one of the most established consumer durables makers in India. Headquartered in Gurugram, Whirlpool of India is a subsidiary of the Whirlpool Corporation.
The company has three factories in India, for manufacturing their products. The company’s product offerings are – Washing Machines, Refrigerators, Air conditioners, microwaves, and air purifiers, to name a few.
Financial Performance Of Whirlpool India –
|CMP||₹ 1,414||Market Cap (Cr.)||₹ 17,945 Cr.|
|EPS||₹ 20.4||Stock P/E||69.2|
|ROCE||10.7 %||ROE||9.23 %|
|Face Value||₹ 10.0||Book Value||₹ 270|
|Promoter Holding||75.0 %||Price to Book Value||5.26|
|Debt to Equity||0.01||Dividend Yield||0.36 %|
|Net Profit Margin||4.64 %||Operating Profit Margin||6.50 %|
Whirlpool is a mid-cap consumer durable company. It has a market cap of ₹17,945 crores. A 5-year overview of its financials shows a growth trend for sales and profits.
2022 saw the company post its highest sales and profits in 5 years, at ₹6,197 crores and ₹567 crores respectively. Operating profits, however, have fallen slightly over the same period.
The company’s ROE (9.23 percent) and ROCE (10.7 percent) are on the low end of ideal figures. They have, however, maintained relatively low debt, having a D/E ratio of 0.01.
Promoters are the biggest shareholders of Whirpool, having a 75 percent stake in the company. Investing in Whirlpool India 5 years ago would have given a negative 2.17 percent return as of today.
3. Dixon Technologies
While most consumer durable companies have established brands, not all of them manufacture their own products. That process is outsourced to manufacturers like Dixon Technologies.
They are OEMs or Original Equipment Manufacturers for different brands like Boat. The company makes various appliances, including smartphones, TVs, light bulbs, CCTVs, and electronics wearables.
They have 18 manufacturing facilities across India, along with 6 R&D centers.
Financial Performance Of Dixon Technologies –
|CMP||₹ 2,680||Market Cap (Cr.)||₹ 15,961 Cr.|
|EPS||₹ 40.0||Stock P/E||67.2|
|ROCE||22.5 %||ROE||21.9 %|
|Face Value||₹ 2.00||Book Value||₹ 187|
|Promoter Holding||34.1 %||Price to Book Value||14.3|
|Debt to Equity||0.37||Dividend Yield||0.07 %|
|Net Profit Margin||1.78 %||Operating Profit Margin||3.92 %|
FY 2022 turned out to be one of the best-performing years for Dixon Technologies. They clocked in an all-time high sales figure of ₹10,697 crores. The operating profit margin has more or less been the same in the past 5 years (4 percent).
This is understandable as wholesale OEMs have smaller margins. While sales have grown by almost 4x, the profits have also well over tripled in 5 years. FY 2022 saw profits of ₹190 crores, vs. FY 2018 profits of ₹61 crores.
The company has had a very positive and high return on equity of 21.9 percent, alongside a high ROCE of 22.5 percent. It also has an ideal D/E ratio of 0.37. The promoters of Dixon Technologies hold a 34.06 percent stake in the company.
This is a 2 percent decrease from September 2020. The returns of Dixon Technologies are one of the best in the industry, giving a 266 percent return on investment in 5 years.
4. Bajaj Electrical
The Bajaj Group is a well-established business house. They have already dominated the market for both two and three-wheeler vehicles.
Bajaj Electrical is their consumer durables subsidiary, which makes everyday use products such as lights, water heaters, ovens, blenders, and rice cookers.
Most of their products are kitchen appliances and home comfort. The company has a diverse product portfolio just for the consumer durables sector.
Financial Performance Of Bajaj Electrical –
|CMP||₹ 1,084||Market Cap (Cr.)||₹ 12,472 Cr.|
|EPS||₹ 17.8||Stock P/E||58.2|
|ROCE||13.3 %||ROE||9.42 %|
|Face Value||₹ 2.00||Book Value||₹ 159|
|Promoter Holding||62.9 %||Price to Book Value||6.84|
|Debt to Equity||0.03||Dividend Yield||0.28 %|
|Net Profit Margin||3.35 %||Operating Profit Margin||6.11 %|
Bajaj Electrical is a mid-cap consumer durable company, part of the much larger Bajaj Group. It has a market capitalization of ₹12,472 crores.
The company’s latest annual reports showed that they made ₹4,768 crores in sales (FY2022). The sales growth has been stagnant for some time, as FY2018 sales were ₹4,697 crores.
That’s a sales growth of just 2.3 percent in 5 years, well below the ideal growth rate. Even the operating profit margin has fallen from 6 percent to 5 percent. Although the sales growth has flatlined, the company is profitable.
They posted a net profit of ₹154 crores in FY2022, almost double that of its 2018 profits (₹84 crores). ROE (13.3 percent) and ROCE (9.42 percent) are quite low and below the ideal figure.
Despite a slow growth rate in sales and profitability, the company has managed to maintain low debt levels. They have a very healthy and low D/E ratio of just 0.03.
Promoters own a high stake of almost 63 percent in Bajaj Electricals, with no recent selling or offloading. 5-year returns of Bajaj Electrical would have given you over 1.5x return on investment, making it a multi-bagger stock.
An investment of ₹1,00,000 in Bajaj Electrical would have been worth ₹2,52,560 today.
5. Blue Star
We’re at the 5th and one of the final consumer durable stocks in India in this article – Blue Star. The company, whose business is consumer durables, is specific to operating in the HVAC industry or the Heating, Ventilation, and Air Conditioning industry.
They manufacture air conditioners, air coolers and also water coolers. Blue Star’s business is not limited to consumers alone.
They also cater to the needs of commercial and business customers, such as central air conditioning units for offices, commercial refrigeration as seen in ice cream stores, and after-sales services for the same.
Financial Performance Of Blue Star –
|CMP||₹ 1,218||Market Cap (Cr.)||₹ 11,734 Cr.|
|EPS||₹ 25.0||Stock P/E||48.8|
|ROCE||19.9 %||ROE||17.5 %|
|Face Value||₹ 2.00||Book Value||₹ 109|
|Promoter Holding||38.8 %||Price to Book Value||11.2|
|Debt to Equity||0.76||Dividend Yield||0.80 %|
|Net Profit Margin||2.76 %||Operating Profit Margin||6.05 %|
Blue Star posted its best revenue figures in FY2022. They made sales revenue of ₹6,046 crores, with an operating margin of 6 percent and net profits of ₹168 crores.
Their revenues have grown over the past 5 years, although at a slow pace of just 6.6 percent. But profits have not grown at the same pace, as the company achieved a net profit of ₹144 crores with revenues of ₹4,639 crores in 2018.
Blue Star’s ROE (17.5 percent) and ROCE (19.9 percent) make it one of the best-performing consumer durable stocks in India. It also has an ideal D/E ratio of 0.76.
The promoters of Blue Star own almost 39 percent of the company, with the rest being held by retail and institutional investors. With a current market price of ₹1,228.6 per share, the company has given a return of 71 percent in 5 years.
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When the average income of the consumer population goes up, it automatically opens up new avenues for business. The consumer durables sector is one such industry, that benefits from the rise in disposable income in Tier-I and Tier-II cities.
With an economic shift in India’s goal to become a developed economy, the consumer durables sector is surely going to benefit in the long run.
That’s all for this blog on consumer durable stocks in India. We hope you learned something new. Happy Investing!
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