New Delhi [India], June 4 (ANI): Electrical and consumer durable companies are likely to face margin pressure in the first quarter of FY27 despite reporting healthy revenue growth in the March quarter, according to a report by Centrum.
The report said companies are struggling to fully pass on rising input costs to consumers as they seek to protect demand.For Centrum's coverage universe, revenue grew 11 per cent year-on-year to Rs 489 billion in Q4FY26, driven mainly by the wires and cables (W&C) segment. However, profitability remained under pressure, with EBITDA margin falling 100 basis points to 9.8 per cent and profit after tax (PAT) declining 19 per cent to Rs 26.7 billion.
The W&C segment delivered strong sales growth of over 20 per cent during the quarter, supported by higher commodity-linked realizations. Centrum noted that 'W&C saw single digit volume growth while realization rose by 15-25 per cent' due to the quick pass-through of copper and aluminium prices.
Demand trends across other categories were mixed. Sales of refrigerators, air conditioners and fans remained subdued due to the delayed onset of summer and elevated channel inventory. The report said growth in summer products was impacted by inventory built up ahead of the implementation of new BEE norms from January 1, 2026.
On the positive side, kitchen appliances and lighting products recorded healthy growth. According to the report, 'kitchen appliances saw double digit growth led by cooking categories,' while B2C lighting also posted double-digit volume growth.
Margins came under pressure during the quarter because of 'rising commodity costs, forex volatility' and other cost factors. While companies implemented price hikes, the report said these were inadequate to offset increased cost.
The report also highlighted challenges in export markets, noting that 'W&C export sales faced challenges due to Middle East conflicts.'
Looking ahead, the report expects profitability pressures to continue. It said that while April sales of summer products were weak due to delayed summer conditions, demand improved in May amid heatwaves. However, 'Q1FY27 will see margin pressure coming to the forefront as unabated rise in input costs could not be fully passed on to protect demand,' the report added. (ANI)
