Within B2C, premium segment has fared well while entry/economy segments, particularly rural pockets, continued to remain stressed. In terms of categories, water heater grew well for most companies (particularly for Crompton, Orient, Havells) while kitchen appliances failed to post meaningful growth (except for Stove Kraft) despite the favourable base, the report said.

Gross margin improved on the back of a benign RM environment, though it was offset by high competitive intensity (schemes/discounting), and sustained spends (A&P). Notwithstanding 3Q miss, we continue to maintain our positive view on the space from the medium-to long-term perspective given macro tailwinds (low penetration in some categories) and category expansion opportunities for most companies, the report said.

Demand for premium products such as BLDC fans and premium water heaters continued to rise, while demand for mass products remained subdued, particularly in rural areas. Aggressive discounting policies increase A&P spending and adverse operating leverage offsets expansion in gross margin, the report said.