India’s Large Appliance Sector Faces Slower Growth, Higher Investment Outlay

India’s large appliance sector is expected to experience slower revenue growth in FY26, even as manufacturers continue to invest in capacity expansion. According to Crisil Ratings analysis, the industry’s revenue growth may moderate to around 5–6% this fiscal, compared with a strong 16% growth in the previous year. 

The moderation is largely attributed to subdued demand during the early monsoon and the impact of a high base from the previous year’s strong performance.

Temporary Boost from GST Reduction

The recent reduction in Goods and Services Tax (GST) on air-conditioners and large-screen televisions, announced ahead of the festive season, is expected to provide short-term support. The lower tax rates are anticipated to make products more affordable, encouraging consumers to upgrade to higher-end models. As a result, second-half growth could rise by 11–13%, helping to offset weaker sales in the first half of the fiscal.

Margin Pressure Amid Rising Costs

Operating margins in the sector are expected to decline slightly, by about 20–40 basis points, settling at around 7.1–7.2%. This decline is being driven by rising input costs and heightened competition, especially in materials like steel, aluminium, and copper. Despite cost challenges, manufacturers are choosing to absorb part of the pressure to retain market share and sustain volume growth.

Strong Capital Expenditure Plans

Even with margin compression, companies are not holding back on investments. Capital expenditure in the sector is expected to increase by nearly 60% to reach around ₹2,400 crore in FY26. The air-conditioner segment alone is likely to account for nearly half of this spending, as manufacturers prepare to comply with new Bureau of Indian Standards (BIS) norms for imported compressors, which will come into effect from April 2026.

Mixed Performance Across Product Segments

The performance across product categories is likely to vary. The refrigerator segment is expected to record moderate double-digit growth in the second half of the year, driven by increased demand for larger-capacity models. Meanwhile, washing machine sales are projected to grow by around 7–8%, supported by stronger demand for dryers due to weather-related factors.

Stable Financial Profiles

The overall financial health of the sector remains steady, supported by low reliance on borrowings. According to Crisil Ratings, the average interest coverage ratio remains above 20 times, while the net cash accrual-to-debt ratio stands at approximately 2.5–2.6 times. This financial resilience allows companies to maintain expansion plans despite near-term challenges.

Read More:India’s Economy Projected To Grow At 6 Percent Annually Until 2040 Says DBS Bank

Conclusion

While the near-term environment reflects slower momentum, the sector continues to hold long-term potential, supported by low household penetration levels and rising urban consumption. As investment in capacity and product innovation continues, the industry is expected to stay on a steady path of gradual, sustainable growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.