Deans Speech
Consumer stocks have been the centre of attention in the stock markets for over two years now. But with prices rising and higher interest rates expanding loan repayments, will the Indian consumer remain unaffected?
We ran an analysis of listed companies in consumer segments such as auto, apparel, jewellery, FMCG and so on over the past four quarters to figure out whether all is well with consumer spending.
We found that while some sectors maintained the tempo of sales growth, others saw growth in the March '11 quarter slowly taper off towards the end of the year.
And yes, Indian consumers did change their buying patterns. They cut back sharply on big-ticket purchases and discretionary products. Essentials remained resilient, with companies even managing to push through price increases without hurting demand. Here are four key trends.
BIG-TICKET ITEMS HIT
Consumer durable companies clocked a collective revenue growth of 13 per cent in the March '11 quarter over the year-ago period. That growth dwindled to 1 per cent by the December '11 quarter. Sales of air-conditioners and refrigerators took the heaviest blow. A mild summer was said to be the key reason for the poor showing of the AC market.
For instance, Hitachi Home, which is in the premium AC category, saw an 8 per cent sales drop in the six months ended December '11 compared with the same period a year ago. A similar decline showed up in the AC sales of Blue Star.
Similarly, car sales took a hit with the September and December 11 quarters seeing a decline in the number of cars sold compared with the year-ago periods. Rising prices of essentials and monthly loan obligations already squeeze disposable incomes. Further, a good part of big-ticket purchases is made through financing schemes. With high interest rates, consumers may be more wary of taking on high-cost debt to fund discretionary purchases.
Among other big-ticket products, high gold and diamond prices put off consumers. Gold
We ran an analysis of listed companies in consumer segments such as auto, apparel, jewellery, FMCG and so on over the past four quarters to figure out whether all is well with consumer spending.
We found that while some sectors maintained the tempo of sales growth, others saw growth in the March '11 quarter slowly taper off towards the end of the year.
And yes, Indian consumers did change their buying patterns. They cut back sharply on big-ticket purchases and discretionary products. Essentials remained resilient, with companies even managing to push through price increases without hurting demand. Here are four key trends.
BIG-TICKET ITEMS HIT
Consumer durable companies clocked a collective revenue growth of 13 per cent in the March '11 quarter over the year-ago period. That growth dwindled to 1 per cent by the December '11 quarter. Sales of air-conditioners and refrigerators took the heaviest blow. A mild summer was said to be the key reason for the poor showing of the AC market.
For instance, Hitachi Home, which is in the premium AC category, saw an 8 per cent sales drop in the six months ended December '11 compared with the same period a year ago. A similar decline showed up in the AC sales of Blue Star.
Similarly, car sales took a hit with the September and December 11 quarters seeing a decline in the number of cars sold compared with the year-ago periods. Rising prices of essentials and monthly loan obligations already squeeze disposable incomes. Further, a good part of big-ticket purchases is made through financing schemes. With high interest rates, consumers may be more wary of taking on high-cost debt to fund discretionary purchases.
Among other big-ticket products, high gold and diamond prices put off consumers. Gold