'India's electronic manufacturing may double in five years', study claims

The results season for the first quarter is almost over in the Indian stock market, with most big-ticket listed companies already announcing their results. Now, an analysis by brokerage firm ICICI Direct shows that the top four sectors including capital markets, consumer durables, electronic manufacturing services, and waste management are strong in this first quarter.

This capital markets sector has reported strong results of associated companies for ICICI Direct. The reason obviously is the increase in volume and orders, with a higher number of customers. Growth was also seen in the AMC sector which got an impetus from enthusiastic net equity inflows and record-high SIP inflows.

According to this analysis, an expanding middle class has to be coupled with growing financial inclusion, which shifts household savings into investment products and financial markets, hence creating huge growth opportunities.

The consumer durables sector has done very well during the quarter since summer was at its scorching best, says ICICI Direct. With temperature levels reaching new highs each passing day, demand for air conditioners went up significantly, thereby pushing the topline growth of consumer durables firms.

Margins of consumer durables expanded on the back of lower input costs, better product mix, and operational efficiency. Low penetration, rising middle-class population with high disposable income, and rapid urbanization are the growth drivers for the sector.

The analysis indicated that demand for electronic manufacturing service companies was strong only in electric vehicles, aerospace, railways, and consumer durables like air conditioners and washing machines.

ICICI Direct said, "India's electronic goods manufacturing is likely to double in the next five years from USD 125 billion to almost USD 250 billion."

It has set a target by the government to achieve USD 100 billion worth of electronics exports by FY 2030, which would be a great booster to the sector. Policies like PLI schemes and tax incentives are substantially aiding the industry. Finally, the waste management business saw strong volume growth during the quarter. There has been a hike from formal and organized recycling, with emphasis on recycled content meeting extended producer responsibility regulations for lead, plastic, and tyres. With only 30 percent of the 75 percent recyclable waste that is generated in India being recycled, huge growth opportunity exists in the sector. "The industry is poised for significant growth, driven by increased environmental awareness and regulatory pressures", ICICI Direct said.