What’s Happening?
Companies selling consumer discretionary products such as refrigerators and air conditioners, as well as soft drinks and ice-creams are tightening their belts to gear up for a busy summer season. With things back on track, many companies have increased their production levels from 40-50% in January to 80-90% in February.
The summer season accounts for over half of the annual sales for such products, and companies do not want to miss it this time after dealing with lockdowns in the past couple of years.
Companies That are Gearing Up
Among others, Godrej Appliances said that it is planning to increase production to 100% capacity by March from the current 80%. Amul has increased ice-cream and beverage production by over 20-25% over 2019. Other companies such as Varun Beverages Limited and Radico Khaitan are also upping their game!
Amber Enterprises, India’s largest contract manufacturer for air-conditioners, is also increasing its production levels and will cross its pre-COVID peak by March. The industry is expecting sales of over 6.5 million AC units as compared to 5.2 million in the previous year and 7 million in 2019.
What’s In Store For Investors?
Although the markets have kept investors nervous owing to Russia-Ukraine geopolitical tensions, a look at the end of the tunnel will provide a ray of hope.
With the third COVID-19 wave being shorter and less severe, these companies have announced plans to ramp up their productions to pre-COVID levels. Investors betting on thematic stocks can keep an eye on companies in the consumer discretionary sector as this is the time when they make most of their money throughout the year.
The increased volatility in the markets and the geopolitical risks might offer various opportunities to investors in the near term to purchase financially sound businesses in this sector. And if all remains well, it could be a great summer for you too!
