Earnings Outlook
Havells Jul-Sept sales seen up 12% on year aided by cables
This story was originally published at 20:00 IST on 14 October 2024
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By Sunil Raghu
AHMEDABAD – Havells India Ltd.'s revenue for the September quarter will likely be driven by robust contributions from its cables and wires division, supported by the electricals and consumer durables verticals. The consumer durable goods and power distribution equipment manufacturer's top line for the quarter is seen rising 12.4% on year to INR 43.74 billion, according to an average of estimates by 10 brokerages. However, on a sequential basis, the net sales are seen declining 24.6% in Jul-Sept.
The estimates for net sales range from INR 43.02 billion by Kotak Institutional Equities and INR 44.89 billion by Nomura Equity Research.
The analysts appear to be divided on the performance of electrical, consumer durable and electronic companies in Jul-Sept. While some brokerages see rising localisation in electronics manufacturing services, continued growth in room air-conditioners and cables and wires and stocking up ahead of the festival season to drive growth for firms like Havells India, others believe that a softer uptick in the run-up to the festival season and heavy rains could moderate consumer demand in the September quarter.
Havells India's net profit is projected to rise 32.1% on year to INR 3.29 billion in Jul-Sept, according to the average of the estimates. The net profit, however, is projected to decline 20.0% sequentially. The estimates for the company's net profit for Jul-Sept range from INR 3.01 billion by Elara Securities to INR 3.56 billion by Nomura Equity Research.
Havells India's earnings before interest, taxes, depreciation and amortisation are seen at INR 4.69 billion for the June quarter, compared to INR 4.60 billion reported a year ago, according to the average of estimates by nine brokerages.
Nomura Equity Research, the most bullish among the 10 brokerages, expects September quarter earnings to be strong based on 18% on-year volume growth in the wire and cable segment. This growth is led by healthy housing and infrastructure activity, pent-up demand from the Apr-Jun quarter and a gradual rise in copper prices.
Nomura expects the revenue growth to be supported by a 15% on-year growth in the electricals and consumer durables division and a 20% rise in Lloyd’s revenue. Lloyd is a sub-brand of the company that sells room air-conditioners. Overall, Nomura expects Havells India's EBITDA margins to rise 120 basis points from a quarter ago to 11.1%.
Kotak Institutional Equities, which has projected the lowest revenue for Havells India in the September quarter, sees a moderation in air-conditioner growth after a stellar Apr-Jun quarter. It also sees the volatility in raw material prices impacting channel sentiment, putting pressure on the cable division. Kotak also sees some impact of price erosion on the lighting segment during the September quarter.
Elara Securities expects revenue to rise, driven by Lloyd air-conditioners and lighting and appliances.
Havells India will announce its Jul-Sept earnings on Thursday.
Market participants will look forward to management's commentary on the demand outlook for air conditioners, switchgear and exports. They will also monitor demand trends and channel inventory of room air conditioners and fans, updates on Lloyd's consumer business and outlook on commodity inflation and pricing power.
On Monday, shares of Havells India ended 0.1% higher at 1,940.25 rupees on the National Stock Exchange.
Following are the Jul-Sept earnings estimates for Havells India based on reports from 10 brokerage houses (in INR million):
Brokerage firm | Net sales | Net profit | EBITDA |
Anand Rathi Share and Stock Brokers Ltd. | 43,567.00 | 3,384.00 | - |
Antique Stock Broking Ltd. | 44,038.00 | 3,180.00 | 4,795.00 |
Centrum Broking Ltd. | 44,608.00 | 3,362.00 | 4,833.00 |
Elara Securities (India) Ltd. | 43,163.00 | 3,005.00 | 4,322.00 |
Kotak Institutional Equities | 43,015.00 | 3,146.00 | 4,490.00 |
Motilal Oswal Financial Services Ltd. | 43,059.00 | 3,554.00 | 5.020.00 |
Nomura Equity Research | 44,892.00 | 3,559.00 | 4,995.00 |
Nuvama Wealth Management Ltd. | 43,195.00 | 3,350.00 | 4,757.00 |
Prabhudas Lilladher Pvt Ltd. | 43,184.00 | 3,192.00 | 4,534.00 |
YES Securities (India) Ltd. | 44,699.00 | 3,177.00 | 4,485.00 |
Average | 43,472.00 | 3,290.90 | 4,692.33 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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