India Consumer Durables Stocks – Consumer Discretionary Companies a Good Play on Rising Indian Middle Class

India’s Economy is expected to grow by around 8% in the next decade making it one of the fastest growing major economies in the world.India’s per capita has been rising constantly since the last 2 decades and is expected to continue this rising trend as well.Despite growing inequality in incomes,India’s massive population ensures that even  by 15% of India’s poor enter the middle class it adds a Brazil to the addressable market for Indian consumer companies.Indian Consumer Companies especially the well managed ones with good corporate governance has given spectacular growth to investors.Companies like Titan Industries have become a multibagger stock in the last few years driven by excellent growth and decent margins.Note many of the bigger consumer durable companies in India are not listed here but have a major presence.In Electronics particularly companies like Samsung,LG,Sony,Philips have a big marketshare but are not listed on the markets.However a number of Indian Consumer Discretionary Stocks are listed and have given huge returns to investors.

Many of these consumer durable stocks like VIP Industries,Titan,Gitanjali Gems are still considered an excellent long term investment .Strong growth of the Indian economy,rising rural incomes,expanding middle class are all contributing to consumer durable stocks becoming a great investment category.Here are some of the top consumer durable stocks listed on the Indian markets.

Titan Industries – The biggest consumer durables company in India with a market capitalisation of  Rs. 16,000 crores. The revenues earned in Dec’10 was around 1,900 crores & the net profit margin was 7%. Titan dominates the Watch Market, with a 60% share of the organised sector market. Titan Industries is the world’s fifth largest and India’s leading manufacturer of watches. The company has manufactured more than a 100 million watches till date.  The World of Titan, is one of the most prestigious and visible retail brands in the country Lately, Titan has diversified its business into eye ware & jewellery. Tanishq, the prominent Indian jewellery brand is a division of Titan Industries Limited.

Blue Star – BlueStar is India’s largest central airconditioning company. With a market cap of Rs. 3,000 crores, it fulfils the airconditioning needs of a large number of corporate and commercial customers and has also established leadership in the field of commercial refrigeration. The Company has also started offering Electrical Contracting and Plumbing & Fire Fighting Services. It earned revenue of  Rs. 600 crores & a net profit margin of 3% in December 2010.

Videocon Industries – This is an India-based electronics goods manufacturing company established in 1979. The market capitalisation of the company is Rs. 6,000 crores. It acquired the Electrolux brand in India. The main business activity of Videocon Industries Ltd. involves manufacture of consumer electronics, home appliances, and office automation equipment. The company earned revenues of around Rs. 3,000 crores with a net profit margin of 5%.

Rajesh Exports Ltd. – Headquartered in Bangalore, India the company has a market cap of Rs. 3,000 crores.  Rajesh Exports established the first organized gold jewellery manufacturing facility in India. It covers the entire jewellery cycle beginning from refining of Gold to retailing jewellery.  It has a chain of retail jewellery showrooms known as Shubh Jewellers across India. World’s largest manufacturer of gold Jewellery & India’s largest exporter of gold jewellery, the revenue earned by the company was Rs. 5,000 crores with a net profit margin of 1% in Dec 2010.

V.I.P Industries –  One of the biggest companies manufacturing Travel products in India with  market capitalization is Rs.1,800 crores. I It acquired Carlton brand in 2004 & merged with Aristocrat Luggage Limited in 2008. Lately the company has launched specialized products like water and stain resistant bags with Teflon & VIP Superlite (lightweight luggage). It was ranked amongst Top 100 most trusted brands in a survey by Brand Equity.It earned revenues of Rs.190 crores with a net profit margin of 1%.

Gitanjali Gems – The company initially started with cutting and polishing diamonds for the jewelery trade at Surat, Gujarat, in 1966. With a market capitalization of Rs. 1,900 crores, the Gitanjali Group became a pioneer among major diamond and jewelery houses. The business model integrates all operations, from rough diamond sourcing, cutting, polishing and distribution, and jewelery manufacture, to jewelery branding and retail, as well as global lifestyle brands, in India and abroad. Gitanjali recently raised capital from PE to expand its operations.The company earned revenues of Rs. 1,200 crores with a net profit margin of 3% in Dec 2010.

Bajaj Electricals Ltd.- With a market capitalization of Rs. 2,000 crores, it is an India-based consumer electrical products manufacturing company. The concern has also sister business concerns like Bajaj Auto  ranked as the world’s fourth largest two and three wheeler manufacturer.  It has six strategic business units – Engineering and Projects, Appliances, Fans, Luminaires, Lighting and Morphy Richards. The company has earned revenues of Rs.600 crores with a net profit margin of 5%  in Dec 2010.

Whirlpool India Ltd. – With a market cap of Rs. 3,000 crores, Whirlpool is the most recognized brand in home appliances in India and holds a market share of over 25%. In 1996 Whirlpool Washing Machines Ltd. and Kelvinator India Ltd. merged together to form Whirlpool of India Ltd and marked its entry into Indian refrigerator market as well. World’s number one manufacturer and marketer of major home appliances,  with 11 major brand names such as Whirlpool, KitchenAid, Roper, Estate, Bauknecht, Laden and Ignis.The company earned revenues of Rs. 600 crores & a net profit margin of 4%.

Summary

Most of the major Consumer Durables Companies are not listed on the Indian Stock Exchanges.Even in cases they are listed the corporate governance issues make those stocks a bad investment even as major MNCs like Honda,Siemens,Suzuki generally short change minority Indian investors using legal loopholes.However a number of Indian domestic consumer durable manufactures form an excellent investment play on India’s rising middle class.