TTK Prestige Ltd, the Hosur-based home appliances maker, today hit a 52-week high of Rs 635.90 in intra-day trading on the Bombay Stock Exchange (BSE). The stock has been on an upward swing over the last one month, moving up 400 per cent to the BSE Sensex.
TTK Prestige, however, is not an exception. Stocks of a few companies in the lighting, home appliances and consumer-durable space have been outperforming the Sensex over the last few months. These include companies such as Havell’s India, Bajaj Electricals, Khaitan, TTK Prestige, Whirlpool, Crompton Greaves and Hitachi Home and Life Solutions.
Consider this: Companies such as Whirlpool and Hitachi Home and Life Solutions saw their stocks moving up 500 per cent during the last month, according to analysts who track these companies.
Havell’s, for instance, has been outperforming the Sensex since May last year, but the stock peaked in December 2009, moving up 400 per cent. It continues to hover around that mark. Bajaj, on the other hand, was over 400 per cent up last month, while Khaitan Electricals and Crompton Greaves were up 180 per cent and 200 per cent, respectively.
The big contributor to this growth, according to Kishore Ostwal, chairman & managing director of Mumbai-based capital market research firm CNI, is the strong retail and institutional-level consumption story which is pushing up demand for products.
Ostwal says a resurgence in the economy, as well as a rise in disposable incomes by about 40-50 per cent in the last two years, on the back of the release of arrears by the Sixth Pay Commission, has had a direct impact on offtake of consumer durables and home appliances. The rise has been particularly strong since October last year, says Purnendu Kumar, associate vice-president, Technopak Advisors, when most consumer durable and appliance manufacturers registered good numbers in terms of sales.
For lighting majors, their order books have been strong on the back of government projects to replace regular light bulbs and fixtures with chloro-fluorescent lamps (CFL). CFL are considered to be energy-efficient and cheaper than the light-emitting diode (LED) lamps. “It will take some time for LED lamps to penetrate down to the last mile. Costs are prohibitive,” says Harish Vasudevan, an independent analyst who tracks these firms. “Right now, the growth will be largely in the CFL segment.”
Most players such as Bajaj, Havell’s and Philips (which is unlisted) are ramping up CFL capacity to take advantage of this growth of about 25-30 per cent per year. Compared to 80 million units in 2007-2008, the CFL market is over 275 million-unit-strong. “This is clearly contributing to their stock performance,” adds Ostwal of CNI.
