White Goods, Durables - Copper Prices Rise, But Other Raw Materials Still In Deflation Zone: ICICI Securities

ICICI Securities Report

Copper, a major raw material (more than 35% of raw material cost) is back in inflation zone. However, other raw materials such as aluminium, steel and high density polyethylene are still in deflation.

We model white goods and durable companies to report 100-300 basis points YoY Ebitda margin expansion in Q4 FY23. However, we believe the benefit will be highest for electrical consumer durable companies, followed by cable and wire companies.

We model white goods companies to pass on most benefits of correction in input prices. We also model white goods and durable companies to invest the gains in-

1. raising ad-spend,

2. increasing research and development spends and launching differentiated products, and

3. increasing trade schemes and consumer offers to gain market share.

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