LG Electronics India, Dixon, Nykaa, CarTrade among Nomura's top picks for Q1; margin pressure may persist

Nomura expects consumer durables companies to post healthy revenue growth in the June quarter, aided by a prolonged summer, price hikes and a favourable base, although higher input costs and promotional spending are likely to keep margins under pressure.

The brokerage said it prefers LG Electronics India, Dixon Technologies, CarTrade and Nykaa, while maintaining a 'Neutral' rating on Voltas and Kaynes Technology.

"Our industry checks indicate that the extended summer season (due to delayed monsoons) has led to improvement in demand for the summer portfolio," Nomura said. While retail demand remained strong, dealers were cautious on restocking as the season drew to a close.

For air-conditioner makers, the brokerage expects industry retail sales to have grown in strong double digits during Q1FY27, supported by cumulative price hikes of 12-13% between March and June. It said LG Electronics India and Lloyd were ahead in passing on higher costs, while Voltas remained focused on market share growth.

In the electronics manufacturing services (EMS) space, Nomura expects Dixon Technologies to see a sequential improvement in mobile phone volumes despite an industry-wide decline of 10-15% year-on-year. The brokerage said upcoming export-linked incentives and approval for Dixon's Vivo joint venture could become key catalysts in the second half of FY27.

For digital businesses, Nomura expects CarTrade to maintain healthy momentum in its classifieds business, with new initiatives at OLX likely to aid growth from the September quarter.

Nykaa is also expected to deliver another strong quarter, with sustained growth in its Beauty & Personal Care business and a sharp acceleration in fashion sales.

Overall, Nomura estimates revenue and EBITDA growth of around 21% and 25%, respectively, for its consumer durables coverage, while EMS companies are expected to post revenue growth of around 14%.

The brokerage expects LG Electronics India, Dixon Technologies and Nykaa to outperform expectations in Q1, while Kaynes Technology could disappoint due to slower growth in its smart meter business.