Panasonic Home Appliances

The stock of Panasonic Home Appliances has been steadily moving northwards over the last one year riding the wave of optimism on consumer businesses.



Panasonic Home Appliances, the Indian arm of Panasonic Corporation, Japan, sells electric cookers, mixer grinders and other household appliances and consumer electronics.

In all four quarters of last year, the company reported strong growth in sales backed by demand. News of the company's intent to enter the automobile sector with in-house entertainment products and sensors and the plan to foray into tier II/III cities to sell its consumer electronic items, appear to have driven the stock's rally.

Panasonic Home Appliances' business thrives on a margin of 1-2 per cent at the net level, weighed by lower margins on trading goods and low volumes sold. Cost over-runs, even if minor can impact the company's bottom line significantly posing a business risk.

The company is planning a massive expansion over the next three years to set foothold in the Indian market as a leader in the home appliances market. However, the company's prospects over the medium term do not justify the current valuation of 90 times (trailing one year).

via BL