New Delhi [India], November 18 (ANI): India’s consumer electrical and durables sector witnessed weaker-than-expected demand in the second quarter of FY26 despite the benefits of GST reduction, according to a report by Centrum.
The brokerage highlighted that Q2FY26 was marked by soft sales in key summer product categories as companies faced inventory challenges, a prolonged GST transition period, and the impact of an extended monsoon.
It stated “Weak primary and secondary sales of summer product categories due to high opening inventory and five week GST transition period, which led to purchase deferment……. GST transition & extended monsoon affect summer product demand”.
Centrum noted four major themes during the quarter, weak primary and secondary sales in summer-linked categories, contraction in EBITDA margins due to low fixed-cost absorption, intensified cost rationalisation efforts by companies, and a continued focus on premiumisation to improve realisation and margins.
According to the report, the coverage universe of Centrum posted a 5 per cent year-on-year revenue growth at Rs 303bn during the quarter. Electricals firms outperformed with sales rising 9 per cent YoY to Rs 163.1bn, while durable companies reported flat revenue at Rs 139.6bn.
The report said the underperformance of the overall sector was largely linked to the higher skew towards summer products, which were hit by high opening inventory and a five-week GST transition period that prompted purchase deferment by traders and consumers.
The report added that rising prices of key commodities such as copper and aluminium are emerging as important factors to watch, as companies may need to take price hikes to protect margins.
Another key monitorable is the upcoming BEE norm transition effective from 1 January 2026, which could influence primary sales in Q3FY26 as companies prepare for the regulatory change.
Across product categories, performance remained mixed. Wires and cables (W&C) registered mid-teen volume growth, driven by strong B2B demand and up-stocking by trade amid rising copper prices.
Large W&C manufacturers delivered around 20 per cent value growth. In contrast, the room air conditioner (RAC) segment saw nearly 20 per cent YoY de-growth in H1FY26.
Channel inventory levels also varied across segments. TPW fan inventory remained very high, while inventory for ceiling fans was slightly above normal.
After several quarters of price pressure, LED price erosion has now stabilised, helping value growth outpace volume growth, particularly in the B2B space.
Meanwhile, washing machines recorded healthy growth due to monsoon-driven seasonality, and kitchen appliances benefited from festive-season demand.
The report expects the sector to continue facing near-term challenges but said the focus on premiumisation and cost efficiency could support margin recovery ahead. (ANI)
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