The silent churn in India's white goods market

Sales in the white goods sector have been hitting highs consistently over the years, indicating a strong demand scenario and growing consumer preference and penetration. However, if we look at the share price performance of the companies, the same cannot be said. Several stocks, such as Whirlpool, IFB Industries, Symphony and others, have been underperforming consistently. Very few like Voltas and Blue Star have escaped this trap.

So, do these underperformers have bad businesses? Not at all. Not only are all of them profitable, but they also generate consistent cash flows and free cash flows. They have a strong brand presence and a solid distribution network, too. So, what went wrong for them? The environment itself.

An overcrowded market

India was, and still is, a strong market for consumer appliances, with a huge addressable base and significant growth potential. While the rise in consumption began in the 2000s, the attractiveness of the market became an open invitation for newer players. All major consumer brands, domestic and international, became aggressive in this space. The result? Shrinking margins.

With more players competing for the same wallet share, products in this industry became commoditised, resulting in similar features and ultimately settling into price-based competition. What followed was discount-led competition in an attempt to woo buyers.

While each brand has made a name for itself in a particular segment, almost no brand has been able to earn well across all segments.

The recent news

Before we discuss what we think of this industry, let us look at what is happening in the market right now to understand the situation better.

• Haier India’s stake sale: Haier is looking to sell its India business, with Warburg Pincus and Airtel’s Sunil Mittal reportedly in the race. Rumours suggest that the bid price is much below the asking price.
• LG’s delayed IPO: LG India, which was preparing for a public listing, has reportedly put those plans on hold due to a weak FY25 performance and a tepid market response.
• Whirlpool’s parent plans an exit: Whirlpool India’s global parent has already been offloading its shares through bulk deals and is set to become a minority shareholder. Giants such as Reliance and Havells are reportedly eyeing the remaining stake from the global parent.
• Panasonic pulls the plug: In the most drastic development, Panasonic has exited its refrigerator and washing machine business.

Now, some of these developments are still in the realm of speculation, and it is unclear whether or when they might materialise. But there is a noticeable pattern. Players are either exiting or selling their businesses, which would ultimately lead to market consolidation.

White goods market in India

This does not, in any way, imply that the Indian white goods market is underperforming or expected to underperform. Demand remains strong, and penetration is still extremely low compared to developed countries, as the data below shows.

Apart from new demand, there is also a wave of replacement demand that is fuelling volumes. With India’s GDP set to cross USD 2,000 and newer, feature-rich products being launched, discretionary spending is expected to remain robust. This can be seen in the initiatives taken by several companies.

• IFB Industries: Plans to double margins through cost optimisation and price hikes
• Voltas: Supported by unprecedented demand for air conditioners, it posted record profits in FY25
• Havells: Positioning its Lloyd segment as the next growth engine
• Whirlpool: Despite the parent company’s exit plans, management is working to improve distribution and product mix while continuing to generate free cash flows

What to make sense of the industry now?

Take any industry: if it offers vast market potential and strong margins but lacks high entry barriers, it will inevitably attract numerous players, resulting in intense competition, especially on pricing. What follows is margin compression, which is exactly what we are witnessing in the paint industry today. This continues until the market becomes overcrowded, and few players, usually the volume leaders, earn superior returns. Unless companies are willing to operate with substandard returns on capital, there will come a phase when inefficient players begin to exit, leaving behind only those with scale and operational strength.

This is precisely what is happening in the white goods sector at the moment. Weaker and inefficient players are exiting, while stronger ones are cementing their position. It feels like two sides of the same coin. The industry seems to be bottoming out, and this could be an inflexion point, where overall metrics may improve going forward, because it is hard to imagine things getting worse when players are exiting the business altogether.

Should you buy them?

So, the consumer appliances industry appears to be bottoming out in terms of competitive intensity. But are these companies cheap enough to warrant investment? Not necessarily. Since the overall narrative around the sector remains strong, these companies continue to trade at elevated valuations, regardless of the metric used:

When this transition phase will be complete and when numbers will start to improve across the board remains uncertain. After all, several developments we’ve highlighted are still speculative. But when so many rumours revolve around the same theme, they do deserve our attention.

These murmurs suggest that a shift is underway in the sector. It may not necessarily make these stocks compelling buys from a valuation perspective at this point, but it does make them intriguing from a long-term business standpoint.

Also read: Aditya Birla Lifestyle: All growth, no upside?

This article was originally published on July 12, 2025.