More Stories

Informist, Thursday, Jul 18, 2024

--Havells Apr-Jun net profit 4.11 bln rupees 

--Analysts saw Havells Apr-Jun net profit 4.06 bln rupees 

--Havells Apr-Jun net profit 4.11 bln rupees vs 2.87 bln 

--Havells Apr-Jun revenue 57.98 bln rupees vs 48.24 bln 

--Havells: Jul-Sep always a weak quarter for Lloyd 

--Havells: To add more cable, wire capacity in next 18 months 

--Havells: Raised prices in most segments Apr-Jun 

--Havells: Demand has improved over last few quarters 

--Havells: Don't see margin dilution from higher cable sales 

--Havells: Plan capex of 10-11 bln rupees in FY26, FY27 

By Noel John

MUMBAI – Havells India Ltd has managed to beat analysts' estimates and report robust earnings growth for the June quarter owing to a strong summer season. The company's top line grew over 20% on year in Apr-Jun to 57.98 bln rupees, higher than the Street's estimate of 55.68 bln rupees. 

Revenue growth was led by the company's cables and wires division, and its electrical consumer durables segment. The electric goods maker's net profit for the quarter rose over 43% on year to 4.11 bln rupees, beating the analysts' estimate of 4.06 bln rupees. On a sequential basis, the company's topline rose 6.7%, but net profit fell 8.4%. 

Havells' consumer durables brand Lloyd, which sells air conditioners, washing machines, light-emitting diode televisions, and refrigerators, reported a profit before tax of 670 mln rupees for the June quarter, against a 610-mln-rupee loss a year ago. The robust growth in Lloyd's profitability was driven by the realisation of benefits from cost-saving initiatives, according to the company.

"Strong start to the year for AC (air conditioners) as Lloyd captured market opportunity leveraging its large manufacturing capacity; non-AC grows in tandem," the company wrote in its investor presentation. Lloyd contributed to 65-70% of total sales of the company in the March and June quarter. However, the company expects Jul-Sep and Oct-Dec to be challenging for its air conditioner business, the company's management said in the post-earnings conference call.

In the June quarter, Havells' earnings before interest, taxes, depreciation, and amortisation rose 43% on year to 5.76 bln rupees, below the analysts' estimates of 5.82 bln rupees. Its EBITDA margin was 9.9%, lower than 11.7% in Jan-Mar, but higher than 8.3% a year ago. During the quarter, the company increased the prices of its products to offset the impact of rising raw material prices. The cables and wires segment which contributes the most to its topline is unlikely to have any significant impact on its margin on account of higher raw material prices.

In Apr-Jun, the company's overall expenses rose 18% on year to 53.22 bln rupees. The cost of raw materials and components—the biggest expense incurred by the company-- rose 33% to 30.88 bln rupees.

The company's capital expenditure in the June quarter was 2.02 bln rupees. The company has used the amount for its research and development centre and capacity building for fully automatic washing machines and cables. The management during the call said they are waiting final approvals for the last phase of their new facility and expect it to start within this quarter. Going forward, its overall capital expenditure for 2025-26 (Apr-Mar) and 2026-27 will be around 10-11 bln rupees.

"We are continuing to add capacity, both for exports and for domestic segments, and for a larger range of underground cables. For the next one and a half years, we'll see more capacity expansion in cable than wire," Havells' management said while talking about capital expenditure plans. 

The company's advertising and sales promotions expenses increased to 3% of its sales from 2.4% spent in the previous quarter, and from 2.8% spent a year ago. The company has made most of its advertising and sales promotion expenses in Lloyd since the industry is very large and the brand's market share is very small in many categories, the company said. "Hence, we see a huge growth opportunity there," it added. 

"Over the last couple of years, we've seen some tepid growth in the consumer segment. And in this particular quarter, the summer definitely helped," the company said in its earnings call. Going forward, the company said that the demand outlook is positive with some uptick in consumer trends. 

SEGMENT PERFORMANCE

The cables and wires division contributed the most to the company's topline in the June quarter. The segment's revenue rose 2% on year to 15.2 bln rupees. This was on the back of improved performance of industry and infrastructure, leading to a demand for the category, albeit there was some impact due to the General Election. "Healthy growth in power cables despite capacity constraints, however, wires revenue impacted by channel destocking with sharp decline in commodity price in June 2024," the company said.

The Noida-based company's switchgears segment saw a 6% on-year rise in revenue to 5.76 bln rupees. Certain export orders in the segment were shifted to Jul-Sep, the company said. The segment's margin was impacted by a lag in passing on the impact of a cost increase, the company added. 

The company's electricals category grew 20% on year to 10.55 bln rupees on the back of improved scale. Further, its lighting and fixtures segment rose 5% on year to 3.86 bln rupees, even though price deflation continued to erode volume gains. 

Today, shares of Havells ended 0.7% lower at 1,862.65 rupees on the National Stock Exchange. End

Edited by Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.