Top Stock Picks: Stocks To Buy, Hold & Add From Consumer Durables Sector

ICICI Securities, a domestic brokerage company, has picked up the consumer discretionary goods and services (CDGS) sector, with Havells India (BUY) and Crompton Consumer (BUY) as its top selections as a buy rating. According to the brokerage "Most durable companies have Herfindahl-Hirshman index (HHI) of less than 0.2. It indicates competitive intensity is high and even the market leader does not have strong hold over the market. We note (1) cooker and cookware has a high HHI score (>0.35), indicating low competitive intensity and high margins for incumbents like TTK Prestige and Hawkins, (2) HHI score is low (less than 0.2) in white goods, indicating high competitive intensity but also limited impact of new players on incumbents."

ICICI Securities has noted "We believe even if 1-2 players are aggressive in pricing, it may not have a material impact on others as the margins are already low and the industry is fragmented and (3) categories like lighting have an HHI score less than 0.1, indicating very high competitive intensity and hence likely low margins for a prolong period. We remain positive on the white goods and durables sector with Havells India (BUY) and Crompton Consumer (BUY) as our top picks."

"We remain positive on the white goods and durables sector given its strong return ratios, healthy growth potential and low penetration levels. We also expect migration from unorganised to organised sector to steadily generate value. Havells India and Crompton Greaves are our top picks. Key risks: Higher-thanexpected rise in crude oil prices, failure of new product launches and any irrational competition," the brokerage claims.

ICICI Securities has highlighted that "We value stocks in white goods and durables market on DCF methodology (WACC and TG ranging from 10-13% and 3-6%, respectively). Key upside risk: Better-than-expected gross margins due to correction in input prices. Key downside risks: (1) Unexpected irrational competition due to deceleration in general consumption demand, and (2) steep inflation in input prices."

Top White Goods and Durables Stocks Suggested By ICICI Securities

Company	Rating
Amber	HOLD
Bajaj Electricals	ADD
Crompton Consumer	BUY
Dixon	HOLD
Havells	BUY
Polycab	BUY
TTK Prestige	BUY
V-Guard	ADD
Whirlpool	ADD