Consumer durables buck FPI exodus in FY27; festive demand to test momentum

The consumer durables segment saw foreign portfolio inflows worth ₹9,901 crore in the ongoing financial year (FY27), with positive trend seen in four of the six months. This comes even as FPI selloff hit a record ₹3.07 trillion this calendar and swelled to ₹1.76 trillion in the ongoing financial year. Analysts believe premiumisation, rising disposable incomes, housing demand and low penetration of appliances has kept the consumer durables segment on FPI radar.

A deeper analysis shows that consumer durables was among the three top sectors in terms of FPI inflows this fiscal, only behind services and consumer services. "Despite overall selling, selective exposure reflects expectations of structural growth, improving product mix and stronger earnings visibility, alongside resilient domestic consumption," said Ravi Singh, chief research officer from Master Capital Services. Despite the strong inflows, Nifty Consumer Durables index is down 6 per cent in a month, 5 per cent in three months and flat in six months and year-to-date, according to data available on NSE.

Akshat Garg of Choice Broking highlighted that with US yields and crude elevated and the rupee under pressure, foreign investors are cutting rate- and commodity-sensitive heavyweights such as financials and oil & gas, and moving into businesses driven by domestic demand. Durables fit that brief. GST rationalisation have further made ACs and TVs cheaper, while income-tax relief has lifted disposable incomes, and premiumisation is expanding margins.

For instance, LG Electronics India’s Q1 profit rose 27 per cent, and Titan’s domestic business grew 22 per cent in. With room-AC penetration still below 10 per cent, the runway is long, said Garg. According to Kotak Institutional Equities (KIE), secondary volumes in the room AC category could grow at 15-20 per cent YoY in 2Q, aided by a weak base.

Price hikes (10-12 per cent, led by BEE table change and raw material inflation) and pre-buying ahead of the next round of hikes (5-7 per cent effective from October 1, announced by all major brands) could drive healthy primary sales growth in Q2, it said. CHECK Stock Market LIVE Updates Can FPI buying trend sustain?Early trends signal some profit taking by the FPIs, especially with September outflows of ₹1,905 crore. Input costs such as copper, aluminium and freight are up roughly 15 per cent YoY, and brands are raising prices by 4–10 per cent, which will test volumes, said Garg who expects selective buying in the sector.

"Valuations already price in much of the optimism. Festive sell-through and Q3 margins will decide the next leg. If demand absorbs the price hikes, durables should stay an FPI overweight, as they are one of the few large, liquid ways to own Indian consumption with earnings upgrades," he observed.

Among specific stocks to watch, LG Electronics India, Dixon Technologies and Voltas should be on investors' radar, said Singh, supported by demand recovery and long-term growth opportunities, subject to earnings delivery and sustainable profitability. Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion.