Indians are comfortable buying mobile phones from Flipkart and Amazon, but the same level of comfort has not crept in for white goods yet.
In a survey of 100 multi-brand dealers across Delhi and Mumbai, conducted by Kotak Institutional Equities, about 50 percent of respondents said e-commerce companies have not made any impact on their sales.
Thirty-three percent also said that their sales have, in fact, increased ever since e-commerce companies entered the scene aggressively. "Brand name, after-sales service and positive reviews for the brand are the three main factors that influence the consumer's purchase decision across different categories," as per the survey.
It also showed that overall demand remained largely unimpacted, despite price hikes that resulted from the inflationary environment. However, the survey was limited to Mumbai and Delhi, and hence, does not necessarily reflect nationwide trends in India, said KIE.
Biggest piece of the pie
According to the survey, the four leading brands in the fan segment are Bajaj, Havells, Orient and Crompton. A significant portion, 75 percent of total fan sales were made at a price point below Rs 2,500, emphasising the importance of affordability in this segment.
Among the brands, Bajaj, Havells and Crompton emerged as the market share gainers, capturing the attention of discerning customers. "However, Usha faced a setback, with respondents naming it as the brand that lost the most market share," said the survey.
From January 1, ceiling fans got costlier by 8 to 20 percent as the category came under the ambit of mandatory star labelling, as per the revised Bureau of Energy Efficiency (BEE) norms.
Under the new mandate, now manufacturers would have to display star ratings between 1 to 5 stars on their fans. The star rating is dependent on service value (air delivery in cubic meters per minute divided by energy consumption in wattage). This could lead to big players getting bigger, believe analysts.
The survey goes on reveal that Voltas, LG, Samsung and Blue Star are the four most popular brands in the room air conditioner category. While Voltas and Blue Star reported market share gains, Hitachi, Lloyd, Whirlpool and other smaller brands saw a decline.
In Q4, both Voltas and Blue Star reported a double-digit increase in topline, despite unseasonal rains. Voltas' net profit slid 21 percent year-on-year while Blue Star's bottom line jumped three-fold due to an exceptional item. Both companies are betting big on the growing per capita income of Indian households with Voltas investing Rs 500 crore on a new manufacturing plant in Tamil Nadu.
In the refrigerator segment, Whirlpool and Samsung emerged as the clear market leaders, followed closely by Haier and LG, as per the Kotak survey. Similar to the RAC segment, 73 percent of respondents mentioned a price increase of approximately 7-8 percent in refrigerators over the past three months, it added.
Analyst recommendations
Till consumer sentiment improves in Tier-2 and Tier-3 cities and input cost pressures mitigate for these players, analysts remain divided on the stocks.
Havells has 24 Buy calls, 13 Hold and 7 Sell calls on it with an average price of Rs 1339, indicating no significant upside from the current level. For Orient Electric, the 12-month target is Rs 262, while the current market price is Rs 240.
Crompton Greaves Consumer Electricals has 34 Buy calls, 10 Hold and 1 Sell call. The consensus target on the stock is Rs 328.29, indicating a 20 percent upside from current levels. The company has recently announced a merger with kitchen appliance maker Butterfly Gandhimathi, which makes analysts bullish on its future prospects.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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