Market is expected to remain range bound in short term because breaking of this 15,450 – 15,900 range is necessary for any decisive move, on either side. Though prevailing high valuations and weak first quarter numbers will put pressure, Nifty may remain in safe zone (above 15.450). Accelerated vaccination drive and easing of state level restrictions will support the economy and in turn, will revive market sentiments.
Though Nifty will remain in the trading range for some time, analysts say an upside breakout is possible in the next two weeks, lead by the banking sector. After underperforming the market for some time, heightened activity is happening in the sector. “Bank Nifty has already made a double bottom ( a bullish technical analysis pattern) and last week’s weekly F&O rollout was on a strong note. So, the Nifty’s breakout could be on the upside, taking it to 16,000,” says Vikas Jain, Senior Research Analyst at Reliance Securities.
(Narendra Nathan/ET Bureau)
Sector report: White goods
Premium fans finding more takers now: Opportunity to grow high for this industry in India
Incumbents like Crompton, Bajaj Electricals and Havells are key beneficiaries of steady growth in the fans industry in India. The industry is growing in high single/ low double digits. Due to steady launches of premium products and distribution expansion by organised players, they are gaining share from smaller/ unorganised players.
The premiumisation opportunity as well reducing replacement cycle offers steady growth over next decade. The distribution penetration (outlets/ universe of outlets) is just 50% even for market leader Crompton, indicating strong opportunity to expand. Limited participation by MNCs in fans also results in lower competitive pressures for incumbents. We believe Crompton has advantage of established brand, distribution and large product portfolio and expect it to be a long term winner.
The fans market is worth around Rs 120 billion. Key growth drivers are increase in pucca houses, rural electrification and steady shift from unorganised to organized. The key sub-segments are ceiling fans (72% of market), table, pedestal and wall fans (20%), exhaust and industrial fans (8%). There exists a small segment of kitchen fans too. Fan companies have also introduced multiple premium fans across sub-segments.
Key players and market shares: Crompton Greaves is the market leader with 27-28% market share. Other key players in the industry are Havells, Bajaj Electricals, V-Guard and Polycab. Due to steady investments in distribution and innovation, Crompton has steadily gained market share over the past four years.
Steady shift towards organised industry: The share of organised industry has moved from 65% in 2013-14 to 70% now. Higher investments in distribution and impact of demonetisation, GST and covid on business model of unorganised sector have resulted in organised players gaining market share. Rising share of premium price point based fans: The fans industry is divided in three segments as per price-points. The economy fans are priced up to Rs 1,500 whereas standard fans are priced between Rs 1,500 and Rs 4,000. The premium fans are priced Rs 4,000 onwards.
Differentiation is key: Apart from basic functionality of fans, the durables companies have introduced fans with multiple other benefits. The benefits include (1) better reach of air / better area coverage, (2) lower consumption of electricity, (3) superior colours and aesthetics and (4) anti-dust. We believe the steady innovation will continue to drive growth of the industry. The differentiated fans enjoy better 10-50% better realizations compared to basic fans.
Sector view & top picks: Considering strong return ratios and healthy growth potential and low penetration levels, we remain structurally positive on white goods and durables sector. We also expect the migration from unorganised to organised sector to steadily generate value. Havells and Bajaj Electricals are our top picks. We have ADD rating on TTK Prestige.
(ICICI Securities)
