Consumer durables firms may have to wait until Q3 to find their sea legs

Hypercompetition, high-cost inventory, and volume-over-margins delay gains

After subdued demand in the second half of the April-June quarter (first quarter, or Q1) of 2022-23 (FY23) and pressure on profitability, brokerages expect prospects of consumer durables companies to improve on the back of good monsoon and softening of raw material costs.

Amid concerns with growth and profitability, some segments within the fast-moving electrical goods (FMEG) sector saw earnings downgrades of up to 16 per cent after Q1FY23 results.

Inflation trajectory, according to Edelweiss Research, remains the most crucial variable for pure consumer segments, supporting both valuation and growth.

Given the heightened risk to growth and profitability, the past