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Consumer Durables Q3 Results Preview – Long Term Positive, Near-Term Challenging: Prabhudas Lilladher #business

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Prabhudas Lilladher Report

We resume coverage on consumer durables sector with optimistic view for long term, while near term slowdown prevails. In Q3 FY23 companies are expected to register sales growth of 5.2% YoY with Ebitda/profit after tax decline of 4.0%/ 6.8% YoY.

The sector has huge opportunity given low penetration and consolidation in the market, which we believe, will increase long-term demand. However, demand softness was witnessed in a seasonally weak quarter, due to winters affecting both room air conditioner and fan sales along with no demand uptick in festive season.

Rural demand has been poor, due to inflationary environment and outlook remains weak.

We prefer companies with robust return profile, controlled working capital, cost leader and continuously expanding opportunity market.

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