Hi Hiteshji
Would like to know your views about Consumer Durables (Appliances specific) sector (eg. companies like Voltas, Whirlpool, Hitachi AC etc.) in current context as well as in context of long term core portfolio picks.
I have observed that Consumer discretionary as a sector has created immense wealth because of factors such as growing per capita income, premiumization, niches etc. However same is not true for Consumer durables (appliances) over last decade or so…I see that in case of Consumer Discretionary, even though there maybe competition but still clear leaders with pricing powers emerge – such as Page or Titan for eg. However in case of appliances, the intense competition leads to price erosion with no clear leaders visible (Voltas has a leading market share by volume in retail AC segment but still with negligible pricing power) and neither ability/multiple levers to manage input costs (as evident in current context of high inflation)…
In this context, are such appliances companies good core portfolio bets? Are times like current (perfect inflation, input cost & parts availability storm) a great time to add these? Have appliances companies created wealth globally? – Whirlpool is a US mammoth but was in trouble inspite of the brand history etc. in US. Does it make sense to completely ignore this sector because of poor economics and concentrate on other consumer focus sectors (if one wants to be in Consumer facing sectors) which have better levers to make use of their market leadership…or this sector also has merit and deserves a place in core portfolio?
Thanks!
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