Diwali is around the corner, and as always, we at Religare Broking have got the best stock picks for you to invest in when the festivities commence. This year’s theme is Home Improvement, which means we will focus on stocks that play a critical role in building and decorating homes. Home improvement has gained importance in the last year or so as the COVID-led lockdown led to the adoption of the work-from-home culture which urged consumers to focus on beautification and enhancement of their homes. At present, the sector is witnessing a rise in demand and is likely to do well going forward as well, led by a pick up in the real estate sector, growing disposable income, rapid urbanisation and favourable government policies. Additionally, a reduction in the replacement cycle coupled with lower interest rates is boosting growth for the sector. We have eight sectors for you to choose from, they are cement, paints, tiles, ply boards, consumer durables, electric equipment, and wires and cables.
Market size of the Indian paint sector is worth approximately
₹ 50,000 crore. Decorative paint accounts for 75% of the sector, while the remaining 25% is from the industrial segment. Growth will be driven by rapid urbanisation, shortening of the repainting cycle, and higher demand for premium products. Government initiatives like housing for all and increased spending on real estate will boost demand as well.
The plywood sector is expected to grow at a CAGR of 4-4.3% from FY21-26. Its growth drivers are high demand for wood furniture, rise in frequency to replace furniture, increase in disposable income, and availability of a variety of products. Organised players will benefit as they can withstand pricing pressure and have strong brand value.
The Consumer Electrical industry is well-poised to register healthy growth. Increasing penetration, revival in housing demand and increased government spending on housing and infrastructure are key growth drivers. In urban areas, changing consumer preference towards value-added products bodes well for the industry growth.
The last two years were challenging due to a slowdown in the economy & lower consumption in the housing & infrastructure sector. The housing & infrastructure sector accounts for around 70-75% of total cement consumption. In the next few years, growth will be largely driven by improvement in demand. Also, government push towards infrastructure & housing, pick up in real estate & construction activity in urban & rural areas will aid growth.
The ceramics sector is dominated by the unorganised sector and is highly competitive. The industry growth in FY20 & FY21 remained subdued due to the COVID 19-induced lockdown. However, in the next 2-3 years, the sector is expected to grow at a CAGR of 12-14%, led by a shift from traditional to versatile products, rise in exports and pickup in construction activity.
Rise in urbanisation, increased efforts of government in infrastructure and growth in renewable energy are some of the key growth drivers for this segment. Revival in private capex and upgradation of power transmission will aid growth for cables. A resurgence in real estate and rise in disposable income bodes well for the industry.
The fast moving electric goods sector growth will be driven by increasing demand from the real estate and housing sector. Further, demand for branded and premium products, easy availability of finance and low interest rates will help growth as well.
White goods have seen a strong recovery led by easing restrictions, and strong pent up and festive season demand. Its growth prospects look promising on the back of low penetration, rise in disposable income and easy availability of finance.
Diwali is traditionally a good time to invest in equity, and just like we invest in making our home a better place, the very same things that we need to beautify our homes can be used to better our lives and achieve various financial goals. Come, invest with Religare Broking and reap the benefits of expert research. Our Muhurat trading is brokerage-free for all!
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