Consumer durable makers outshine FMCG players with 21% growth in 3 years as market expands by 76%: Think tank CMIE

Within the consumer goods space, which of the following two segments has fared better during the post-COVID period, in your view: consumer durables or FMCG? Consumer durable businesses have registered growth to the tune of 20.8 per cent per annum in three financial years till March 2024, in stark contrast to an expansion of 12.3 per cent per annum in consumer goods companies, according to a report by Mumbai-based think tank Centre for Monitoring Indian Economy (CMIE). The same trend was witnessed in the two segments' respective markets, with expansion rates of 76 per cent and 41 per cent over the three-year period, according to the report. 

The class-market consumer durables category has been "driving the Indian consumer markets juggernaut", wrote Mahesh Vyas, Managing Director and CEO, CMIE.

The consumer durables industries remains the fastest growing segment of the country's consumer market, also one of the most profitable, highlighted the CMIE report. "Growth in the consumer durables industry is reflective, largely, of demand momentum in the upper strata of the Indian consumer markets," it noted.

About 340 consumer durable companies registered a year-on-year increase of 55.3 per cent in their net profits to Rs 59,000 crore in FY24, as per data collated by CMIE. 

Consumer durable businesses' profit growth trajectory appeared to continue into the ongoing financial year, given their net profits of Rs 16,800 crore in the quarter ended June 30, 2024. Also, their margins were at 12.75 per cent in the first quarter of FY25, even better than a record 12.7 per cent recorded for FY24, the data showed. 

Year-on-year growth in net sales, operating expenses, and net profits of consumer durable companies

Source: CMIE

Here are some other takeaways from the CMIE report, dated August 19: 

• FMCG companies are not only growing at a slower pace but also losing steam faster than consumer durable companies
• Consumer durable companies' quarterly net sales grew an average 11.07 per cent in FY24 as against 25.92 per cent the previous financial year
• In Q1 FY25, consumer durable companies maintained 11.7 per cent growth rate vs FMCG companies' 7.0 per cent  
• Consumer durable firms' moderating sales growth performance slowed profit growth though profit margins stood at record levels; their aggregate profits were also recorded at unprecedented levels
• Consumer durable firms clocked 20.4 per cent growth in PAT in Q1 FY25; In FY22, FY23 and FY24, PAT growth came in at 15.9 per cent, 42.7 per cent and 28.4 per cent respectively 

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