Why India’s big appliance makers may struggle to keep cool this year

Revenue growth for India’s large appliance manufacturers is expected to moderate to 5–6% in the current fiscal year ending March 2026, down from 16% last year, as weaker summer demand and higher competition weigh on sales, ratings agency CRISIL said on Thursday.

Sales of air conditioners and other cooling products fell sharply in the first half due to an early onset of the southwest monsoon, CRISIL said.

However, a government cut in goods and services tax (GST) on air conditioners and large-screen televisions in early September provided a boost ahead of the festive season.

“The 1,000 basis point cut in GST to 18% for air conditioners and large-screen TVs will translate to savings of ₹3,000–6,000 per unit,” said Shounak Chakravarty, Director, CRISIL Ratings. “With the price dip coming just before the festive season, increased consumer spends are expected to drive 11-13% growth in the second half, with ~100-150 basis points being attributed towards GST benefits.”

The ratings agency said overall revenue growth would be tempered by higher input costs and intense price competition, shaving off 20–40 basis points from operating margins to around 7.1–7.2% from 7.5% last year.

Despite the softer growth outlook, large appliance makers are set to increase capital spending by 60% to around ₹2,400 crore this fiscal, led by higher investments in the air-conditioning segment.

Manufacturers are ramping up compressor production ahead of new Bureau of Indian Standards (BIS) import norms that take effect from April 2026.

“The AC segment will see substantially higher capex this fiscal as manufacturers set up compressor capacities to mitigate import challenges,” said Prateek Kasera, Team Leader, CRISIL Ratings.

CRISIL said the credit profiles of appliance makers will remain stable given their healthy cash flows and low reliance on debt. The industry’s interest coverage and net cash accrual-to-debt ratios are expected to stay strong at over 20 times and 2.5–2.6 times, respectively.

The agency’s analysis is based on interactions with seven manufacturers that account for about 50–55% of India’s ₹1.3 lakh crore large appliances industry, which includes air conditioners, refrigerators, televisions, and washing machines.

While refrigerator sales are projected to grow in the low double digits in the second half, washing machines are likely to maintain 7–8% annual growth, aided by changing consumer habits and rising urban demand.

“Going forward, volatility in prices of key raw materials such as steel, copper and aluminium, and the extent of competitive intensity in the sector will bear watching,” CRISIL said.