113781In view of reduced inflation and expenses, will it be right to invest in IT stocks?

Smartphones that were a victim of sluggish sales for the past several months are finally stepping out of the gloom towards a brighter future with inventory flying off the shelves to make way for new stocks for the expected festive season boom.

The Economic Times has reported quoting Counterpoint Research, CMR India and IDC India that sales of smartphones in the April-June quarter logged 34-36 million handsets, which is 6% less than the numbers recorded in the same quarter in 2022 but far better than 19% drop compared to the preceding quarter this year.

In fact, data from Counterpoint Research has indicated that the shipments in Q1 of FY24 are likely to be 11% higher than that in the preceding quarter. However, according to another analyst Canalys, the growth in the April-June quarter might be a far more sober 1-2% compared to the January-March numbers.

Among the factors triggering improvement in sales, are falling inflation, rise in the macroeconomic environment and rising demand for 5G handsets that are priming for launch of a slew of models. Sales analysts are also deciphering the release of pent-up demand helping the sales.

They have also indicated that a lot of consumers who purchased phones during the pandemic can also go in for upgrades and this time it is likely that they settle for 5G handsets. The final spice to flavour the sales recipe would be the sales promotion blitzkrieg that different brands and major retailer would be unleashing during the festive season.

With 5G services fanning out across the country, demand for 5G-enabled handsets have taken the shipments past the 100 million mark for the first time. The landmark was created in May. Incidentally, a number of handsets in this category are being launched in the price bracket of Rs 10,000 and Rs 15,000.

Shilpi Jain, senior research analyst at Counterpoint Research said the retail inflation level of 4.25% in May triggered demand which was reflected in rising footfalls in physical stores in June.

Besides Oppo and Vivo, OnePlus also recorded higher demand. Jain said that OnePlus was even hamstrung by a supply crunch of a few of its models owing to improved demand.

Counterpoint also predicted that Samsung, the 1,000lb gorilla in the market, will continue to dominate the market in the second quarter. Vivo could be the second player in the market.

The launch of cheaper 5G handsets have also dragged down the average selling price of phones from $274 in the January-March quarter to $257 in the April-May window, Counterpoint data show. For the 5G sets, the average selling price dropped 13.3% to $391.

However, the drop in average price might be a temporary phenomenon. Analysts predict that with more handsets about to hit the market in the Rs 20,000 plus category, it might rise again in June-July.

5G handset shipments jumped 41% year-on-year during April-June to 17 million units. 4G handset sales, in contrast, shrunk 45%, said CMR India.

Canalys experts said that a number of consumers are buying 5G handsets to ensure they get a higher resale value in the secondary market when they sell their phones sometime down the line.