Weak consumer sentiments are looking up for the festive season: Report

New Delhi [India], October 8 : Weak consumer sentiments are looking up in this festive season, says a report by JM Financials. The consumer durables industry witnessed subdued demand in Q2FY25
The report says the subdued demand may be due to several factors, including heavy rains leading to lower footfall, weak consumer sentiment, and a slow start to the festive season, particularly in the southern region with Onam.
Demand for domestic appliances was muted in Q2FY25 attributed to weak consumer sentiment and lower liquidity in the distribution channels. Lower stocking by the channels ahead of the festive season also affected sales, especially for kitchen and domestic appliances.
But, despite these challenges, revenue growth for the sector is expected to rise by 13 per cent. The report adds, that although the second quarter is typically off-season for air conditioners, the strong demand seen in Q1FY25 resulted in stock shortages and reduced inventories. In Q2FY25, the industry is anticipated to experience 15 to 20 per cent volume growth, largely due to inventory replenishment.
Leading companies like Voltas and Blue Star are expected to see even stronger growth, with RAC volumes projected to increase by 25 per cent-30 per cent.
The demand for fans remained soft in the quarter, but price hikes and an improved product mix, driven by changes in ratings, are expected to boost revenue growth. Volume growth is expected to be in the range of 9 per cent-10 per cent.
The lighting segment continues to face pressure on overall realisations due to increased competition from local brands and a shift in technology towards driver-on-board systems.
The industry is gradually moving towards premium products, but Q2FY25 is expected to remain weak for this segment.
However, products like pumps, inverters, and water heaters saw strong volume growth, and the sector is expected to pick up in the second half of FY25 as seasonal demand kicks in.
The W&C segment saw robust volume growth, driven by a price hike of 3 per cent-5 per cent in early October 2024, strong capital expenditure in the domestic market, and growing export demand from the U.S. and Europe.
In the B2B segment, volume growth of over 15 per cent and a price hike of 5 per cent were recorded.
In the B2C segment, demand remained soft, but an uptick in commodity prices from September led to higher channel stocking, resulting in 12 to 15 per cent volume growth and a 3 per cent price hike.
B2C demand is expected to recover with improvements in the real estate market in the second half of FY25.
Online platforms and modern trade continued to gain market share over general trade, signalling a shift in consumer buying behaviour.