Earnings Outlook
Segmental strength seen lighting up Havells' revenue growth
This story was originally published at 11:06 IST on 15 January 2025
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By Anand JC
NEW DELHI – A strong sales performance in Havells India Ltd.'s electrical consumer durables, switchgear, cables and room air-conditioner businesses is expected to lead to double-digit growth on year in the company's top line for the December quarter, according to analysts.
Havells India's net profit is estimated to grow 17.4% on year to INR 3.38 billion for the December quarter, as per the average of the estimates of seven analysts. This implies 24% sequential growth from the net profit of INR 2.73 billion the company had reported in the September quarter.
The electrical equipment maker's net sales for the December quarter are estimated at INR 50.10 billion, based on the average of seven analysts' forecasts. This would translate to 13.9% on-year and 10.5% sequential growth.
Havells India's cables and wires segment is expected to report a strong December quarter, Nuvama Institutional Equities wrote in a report. Motilal Oswal Financial Services said this business likely grew 15% on year during the December quarter. The cables and wiring segment provides the largest chunk of Havells India's overall revenue, with the segment contributing roughly 40% to its September quarter revenue.
The company is scheduled to detail its earnings for the December quarter on Thursday.
FESTIVE BOOST
The December quarter usually brings cheer to consumer durables companies as demand for appliances and lighting products sees a pick-up, thanks to the festival season. In addition, the final weeks of December see dealerships stocking up on summer products such as refrigerators, room air-conditioners and fans.
A channel check by analysts at Centrum Broking revealed that demand in October was healthy due to the festival season, but tapered down in November and the first half of December. Further, strong channel filling for the upcoming summer resulted in strong air-conditioner and fan sales in the latter half of December.
Havells India's top line is expected to benefit from strong sales from Lloyd, its room air-conditioner brand. Analysts at Nomura Equity Research expect Lloyd's revenue in the December quarter to increase 18% on year while Motilal Oswal has pencilled in 13% on-year growth for the business. Revenue from the room air-conditioner segment in the September quarter was INR 5.87 billion, contributing to roughly 13% of its overall sales.
Motilal Oswal expects the company's electrical consumer durables segment to have grown 9% on year in the December quarter, while Nomura has forecast higher growth of 15% on-year for the business.
Havells India had advanced some of its advertisement and promotion expenditure to the September quarter ahead of the festival season. This led to moderation in its margins across segments. In a press release, the company said that promotional expenditure was expected to normalise over the subsequent quarters. Analysts at Nuvama said this advancement would support the company's margin for the December quarter.
The company's earnings from interest, tax, depreciation, and amortisation for the December quarter are expected to be INR 4.81 billion, as per the average of seven analysts' estimates.
Motilal Oswal expects Havells India's EBITDA to grow 5% on year to INR 4.60 billion. Analysts at this brokerage firm, along with Prabhudas Lilladher, expect the company's operating margin for the December quarter to be 9.3%. Lower losses in Havells India's Lloyd business may result in an EBITDA margin of 10.1% in the December quarter, Nomura said.
At 1038 IST, shares of Havells India were at INR 1,519.90 on the National Stock Exchange, down 0.3%.
Following are the Oct-Dec earnings estimates for Havells India based on reports from seven brokerage firms in descending order by the estimate of net profit:
| Brokerage | Net sales (in INR mln) | Net profit (in INR mln) | EBITDA (in INR mln) |
| Systematix Shares and Stocks (India) Ltd | 50,217.00 | 3,622.00 | 4,969.00 |
| Nuvama Wealth Management Ltd | 49,861.00 | 3,483.00 | 4,891.00 |
| Elara Securities (India) Pvt Ltd | 50,603.00 | 3,461.00 | 4,918.00 |
| Prabhudas Lilladher Pvt Ltd | 50,614.00 | 3,351.00 | 4,707.00 |
| Nirmal Bang Equities Pvt Ltd | 50,897.00 | 3,312.00 | 4,937.00 |
| Kotak Institutional Equities | 49,172.00 | 3,243.00 | 4,662.00 |
| Motilal Oswal Financial Services Ltd | 49,329.00 | 3,182.00 | 4,563.00 |
| Average | 50,099.00 | 3,379.14 | 4,806.71 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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