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Consumer durable & EMS space – Initial signs of demand revival, which shall be boosted with upcoming festive

ICICIdirect Research 28 Aug 2026 DISCLAIMER

Initial signs of demand revival - Consumer durable companies have been delivering modest single digit growth, impacted by input costs and intense competition. However, initial signs of demand revival seen with media reports suggesting festive season starting off strong with Independence Day sales witnessing value sales up to 25% YoY and volumes growing 5–7% YoY across categories. Smart phone, TV and laptop have reversed their Jan-June declining trend. Electronics retailers also reported 20%+ volume growth, signaling improving consumer sentiment ahead of the festive season.
Premiumisation trend is particularly picking pace. For instance, LG electronics 55-inch+ TV segment grew ~53% YoY in Q1 and now contributes ~50% of overall TV business. Overall, this has pushed TV segment growth from a single digit trend to ~20%+ trend in last couple of quarters. Further, sharp GST cut were made by government last year in sept 2025 from 28% to 18% in ACs and 32 inch+ TV size. This has created low base effect as last sept had uncertainties related to GST cut across consumer durable products along with lower footfalls and higher inventories across channels. This shall reverse this season and we believe the full benefit of demand owing to GST cut shall be reflected in upcoming festive for brands. Companies are indicating that stocking for upcoming festive is witnessing strong growth. Separately, media reports indicate GST cut for mobiles from 18% is also in consideration.       
Exports to aid medium to long term growth opportunity – Government has been incentivising domestic manufacturing through PLI, ECMS scheme, etc with focus now shifting on components side, and to develop the ecosystem. This shall eventually build the opportunity for exports, esp. as China+1 gains momentum. Last week, government came up with ₹62,500 cr MPMS scheme which largely focuses on boosting exports, with incentives on brand-based phone manufacturing and on the components side. Dixon is most favorably placed for the same. Besides, AC companies have started exploring opportunity in Europe alongwith strengthening presence in regions like ME, neighbouring countries and parts of Africa. 
Stocks – For upcoming festive, we believe LG electronics, Dixon tech and retailers like Electronics mart, Aditya vision are most favorably placed as they benefit from premiumization trend and low base. We have buy rating on LG electronics with target price of ₹ 2040 and for Dixon at ₹16,300. Besides, we have Buy rating on Crompton consumer (TP: 300), Amber (TP: 8500), PG Electroplast (TP: 780) and Epack durable (TP: 275) which shall also be key beneficiaries.

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