The consumer durables sector is highly sensitive to economic cycles, interest rates, and changes in disposable income, as these factors directly influence consumer demand. In India, the market is price-sensitive too, with analysts saying that pricing plays a key role in purchase decisions.
Although the sector continues to attract new buyers, several factors, including unseasonal rains just ahead of summer, have likely dampened demand. Also, after an exceptional growth in FY2025, which saw a record growth in volumes by up to 25 per cent, led by a sharp acceleration in room air conditioner (RAC) demand, FY26 marked a phase of disruption and reset. A cooler-than-normal summer impacted sales, while the transition to new Bureau of Energy Efficiency (BEE) norms led to short-term cost pressures. Rising copper prices further resulted in the contraction of margins across the industry.
Dealers reduce inventories by 20%
According to Yes Securities, demand for summer products moderated in March 2026 after a noticeable improvement seen in January and February. It said that channel inventory has now normalised, and dealers now remain cautious about stocking up for the upcoming season. In fact, dealers have reduced inventories by about 20 per cent compared to last year.
On the demand side, it said that some slowdown is visible, particularly from the construction segment, where purchases have been delayed in anticipation of price corrections. The brokerage also noted that while enquiries remain steady, they are not converting into firm orders, resulting in lower offtake.
Expensive copper increases input costs
Vincent K A, senior research analyst at Geojit Investments, said the revenue growth in Q4FY26 is expected to remain in the range of 8-10 per cent. Margins may stay under pressure, mainly due to a 33 per cent Y-o-Y increase in copper prices. Additionally, BEE-related price hikes of 5-10 per cent and elevated inventory levels from the weak 2025 summer season could weigh on the overall performance of the sector.
Data showed that in FY25, the extended heatwave drove room AC volumes up by 20-25 per cent Y-o-Y to around 12.5 million units, creating a high base that FY26 has struggled to match.
Shift in weather patterns
Sunny Agrawal, head of fundamental research at SBI Securities, said that the sector entered FY26 with high inventory levels, expecting strong summer demand. “But weather anomalies impacted sales across categories, particularly air conditioners,” he said, adding that the room air conditioner (RAC) segment is estimated to have contracted by around 5 per cent in FY26.
He further explained that rising input costs, especially copper prices reaching record highs of $13,000 per tonne, forced manufacturers to increase prices, which in turn affected demand.
Gas shortage due to West Asia conflict reshapes demand
Additionally, in Q4FY26, gas shortages due to the West Asia conflict led to a sudden spike in demand for induction cooktops, causing temporary shifts within the kitchen appliances segment.
Despite these challenges, analysts said that FY26 represents only a short-term slowdown caused by largely external factors. They expect a low double-digit topline growth for the industry in FY27.
Vincet said that though the near-term earnings may see some pressure, the sector continues to have strong long-term growth potential, driven by rising incomes, increasing household penetration, premiumisation trends, and growing demand for smart and energy-efficient appliances.
“India is on track to become the world’s fourth-largest consumer durables market by FY27, with the industry expected to grow at around 11 per cent CAGR to reach ₹3 trillion by FY29. Also, the BEE transition could support medium-term profitability, as the shift toward higher star-rated products is likely to improve product mix and realisations from H2FY27 onward, partly offsetting near-term cost pressures,” said the analyst.
Consumer durables: Top picks
The BSE Consumer Durables Index is currently trading at about 30 times one-year forward earnings, which is a 15 per cent discount to its five-year average. According to Vincent, this presents a reasonable entry point for medium- to long-term investors. He added that he prefers a mix of defensive compounders such as Havells, Voltas, Amber Enterprises, and PG Electroplast.
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