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Consumer Durable industry came out robust performance for the quarter ended March 2010, driven by lower commodity prices and improvement in demand. With mercury rising beyond normal across the country, the demand for air-conditioners, Refrigerators and other cooling products from households have rebounded impressively. In fact, companies have witnessed 100% growth in cooling products in months of February and March 2010.
BSE consumer durables index consists of 8 stocks viz. Titan Industries, Blue star, Videocon Industries, Rajesh Exports, Whirlpool of India, Bajaj Electricals, Gitanjali Gems and VIP Industries. The aggregate net sales 8 consumer durable companies rose by 30% to Rs 13621 crore. Operating profit margins remains flat at 8.1% and operating profit increased by 31% to Rs 1107 crore. The dip in the interest cost by 14% to Rs 256 crore and marginal increase in depreciation by 4% to Rs 200 crore directed PBT to increase by 71% to Rs 692 crore. Further, fall in the effective tax rate by 600 bps to 24.7% improved net profit to increase by 86% to Rs 521 crore.
Titan Industries, the leader in the Indian Watch industry has closed the year with sparkling performance. Net profit jumped by 98% to Rs 51.25 crore on 49% increase in the net sales to Rs 1311.22 crore for the quarter ended March 2010. The growth in profits is primarily driven from Jewellery business, which registered robust growth of 63% to Rs 991.50 crore in sales and 540 bps expansions in margins to 7.2%. As on 31st March 2010, the company has a total 539 stores, with over 685000 sq. ft of retail space. Titan strengthens its kid's brand Zoop by expanding availability of products in 6 cities to 140 cities in financial year'10. It has launched more than 70 styles under this brand.
Air conditioning major Blue Star, posted modest 22% increase in the net sales to Rs 854.57 crore and 18% rise in net profit to Rs 78.54 crore for the quarter ended March 2010. Operating profit margins have eroded by 90 bps to 12.8% decelerated growth in net profits. The company received order worth of Rs 704 crore in Q4 FY'10 compared to Rs 491 crore in Q4 FY'09. Order book as on 31 March 2010 is Rs 1733 crore, higher 29% on yoy basis.
Videocon Industries, the Electronic appliance major reported robust performance for the quarter ended March 2010. Net sales increased by 28% to Rs 2840.83 crore on the back impressive growth in its both businesses by 30% to Rs 2572.79 crore and 14% to Rs 268.04 crore. At operating level, margins marginally decline by 10 bps to 8.3%. Dip in the depreciation by 5% to Rs 140.92 crore and effective tax rate by 530 bps to 28.6% boosted net profit to increase by 105% to Rs 149.64 crore.
Rajesh exports has reported sizzling numbers in the quarter ended March 2010 with more than 10 folds rise in the Net Profit at Rs 98.56 crore over 31% increase in the Net sales of Rs 6283.74 crore. OPM expanded by 30 bps to 2.1% and led operating profit up by 47% to Rs 130.10 crore. Dip in the interest cost 62% and taxation to 12.3% (compared 54.4% in Q4 FY'09) boosted growth in net profit growth. The order book of the company as on 31 March 2010 is Rs 5743 crore which will be executed by end of September 10. The company aims to establish its presence in retail segment and has aggressive expansion plans. Over the next 18-24 months, the company expects to open 350 retail stores across the country and targets to garner 35% market share in the retail jewellery trade. All the stores will be in form of Franchise outlets while the own shops will be only 10 that too to observe the market pulse in Jewellery Retailing.
Bajaj Electricals net profit declined by 21% to Rs 37.46 crore despite of healthy growth in net sales by 19% to Rs 784.20 crore for the quarter ended March 2010. The degrowth in profits is due to one time expenses of Rs 5 crore on the back un-recovered loan. Order book as on 31 March 2010 is Rs 932 crore, of which Rural electrification order is Rs 404 crore, Transmission line tower order is Rs 429 crore, high mast is Rs 84 crore, street light is Rs 11 crore and others is Rs 5 crore. The company is focusing on introducing new product is consumer business division and is looking at pressure cooker business, gas stove business, induction cooker business and micro oven business.
Net sales of Gitanjali Gems marginally increased by 12% to Rs 791.62 crore for the quarter ended March 2010. Coupled with growth in sales and expansion in margins by 180 bps to 8.3%; operating profit increase by 44% to Rs 65.40 crore. However, sharp increase in the interest cost by 88% to Rs 27.71 crore and taxation of Rs 1.33 crore restricted net profit growth to 13% to Rs 35.30 crore. The company is planning to add 350000 sq. ft of retail space in FY'11 particularly in Tier I and Tier II cities.
Outlook
The sovereign debt crisis in a few countries in European Union region has facilitated fall in metal, polymer and prices of other inputs. The sharp appreciation of rupee against US dollar and Euro has reduced the landed cost of imports of products / components. The Gems and jewellery players have rejoiced good expansion in margins. But most other segments were impacted by intense competition amongst players, and knee jerk buying to satisfy spike in demand, leading to softening of margins. But with strong demand growth, the players are hopeful of maintaining margins and improving profitability.
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