Earnings Outlook
Air-conditioner sales to power Havells Apr-Jun show
This story was originally published at 15:00 IST on 16 July 2024
Register to read our real-time news.Informist, Tuesday, Jul 16, 2024
By Noel John
MUMBAI – Havells India Ltd's revenue for the June quarter will likely be driven by robust contributions from its electricals and consumer durables verticals. The electric goods maker's topline for the quarter is seen rising 15.4% on year and 2.5% sequentially to 55.68 bln rupees, according to the average of nine brokerage estimates.
In the consumer durables business, the company's sub-brand Lloyd is expected to report robust growth in Apr-Jun on account of lower inventory levels and strong demand for air conditioners, due to severe heatwave conditions across the country, according to analysts. The contribution from other segments such as cables and wires, switch gears and lighting is also likely to increase in the June quarter.
Havells India is expected to report a net profit of 4.06 bln rupees for Apr-Jun, marking a growth of 41.2% on year but a decline of nearly 10% sequentially, according to the average of nine brokerage estimates. The estimates for the company's net profit in Apr-Jun are in the range of 2.87-4.46 bln rupees, while the net sales were in a range of 58.14-48.24 bln rupees.
Havells' earnings before interest, taxes, depreciation and amortisation are seen at 5.82 bln rupees for the June quarter, compared to 4.02 bln rupees reported a year ago, according to an average of estimates by eight brokerages.
Prabhudas Lilladher's channel checks showed that demand for air conditioners at the secondary level in Apr-Jun had increased by more than 50% compared with the off-season. The highest demand was experienced at the end of May and channels were unable to fulfil orders in a few states due to lower supply, the brokerage said in its pre-earnings report.
In the June quarter, Lloyd increased prices for air conditioners by around 3% across geographies owing to higher demand and low inventory levels, Prabhudas Lilladher said in the report. Almost 80% of Lloyd's revenue comes from the sale of room air conditioners. The brokerage expects Lloyd to post healthy volume growth on a higher base from Apr-Jun 2023. Further, Lloyd's capacity expansion in south India will also likely benefit its overall performance, the brokerage added.
Heat waves during the June quarter pushed consumers to buy air conditioners, fans, and refrigerators, with premium products sales outpacing entry level product sales, YES Securities said in a research report. However, the brokerage expects the company's Apr-Jun results to be weak as the wires and cables business could post lower growth on capacity constraints and a high base.
The company is set to announce its Apr-Jun earnings on Thursday. Market participants will look forward to management commentary on the demand outlook for air conditioners, switchgears, and other core businesses, and export market opportunities. They will also monitor demand trends and channel inventory of room air conditioners and fans, update on Lloyd's consumer business, and commentary on commodity inflation and pricing actions.
At 1306 IST, shares of Havells India traded 0.2% lower at 1,887.90 rupees on the National Stock Exchange.
Following are the Apr-Jun earnings estimates for Havells India based on reports from 9 brokerage houses:
| Brokerage firm | Net sales (in bln rupees) | Net profit (in bln rupees) | EBITDA (in bln rupees) |
| Anand Rathi Share and Stock Brokers Ltd | 56,718.00 | 4,196.00 | --------- |
| HDFC Securities Ltd | 58,100.00 | 4,300.00 | 6,100.00 |
| Kotak Institutional Equities | 58,135.00 | 4,406.00 | 6,254.00 |
| Motilal Oswal Financial Services Ltd | 57,196.00 | 3,898.00 | 5,873.00 |
| Nirmal Bang Equities Pvt Ltd | 55,500.00 | 4,168.00 | 6,005.00 |
| Nomura Equity Research | 48,237.00 | 2,874.00 | 4,024.00 |
| Nuvama Wealth Management Ltd | 56,900.00 | 4,232.00 | 6,168.00 |
| Prabhudas Lilladher Pvt Ltd | 56,259.00 | 3,991.00 | 5,795.00 |
| YES Securities (India) Ltd | 54,060.00 | 4,463.00 | 6,379.00 |
| Average | 55,678.33 | 4,058.67 | 5,824.75 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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