Analyst Concall
Havells India plans INR 20-bln capex over next 2 years
This story was originally published at 21:08 IST on 22 April 2025
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--Havells India: Inflation pressures on consumer sentiment continue
--CONTEXT: Havells India mgmt's comments in post-earnings analyst call
--Havells India: Commodity prices an overhang in wake of global uncertainty
--Havells India: Focus on consistent revenue growth, improving profitability
--Havells India: Cables business to see consolidation as majors enter sector
--Havells India: See slow growth in product sales due to delayed summers
--Havells India: Industrial demand remained muted for the year
--Havells India: See Lloyd as growth engine, no major headwinds
--Havells India: Cable demand strong, input cost fluctuations a concern
--Havells India: Solar business focus only on residential, commercial units
--Havells India: No plan to enter utility segment in solar business
--Havells India: Entry in solar renewable business strategic move
--Havells India: Advertising budget may stay stable, used for brand building
--Havells India: See capex of INR 20 billion over next two years
By Sunil Raghu and J. Navya Sruthi
AHMEDABAD/MUMBAI – Havells India Ltd. will stay focussed on achieving consistent revenue growth and improving profitability as fluctuating commodity prices amid global uncertainty and visible inflationary pressures on consumer sentiment are still visible, the company's management said in a post-earnings analyst call on Tuesday. The company has announced capital expenditure plans of INR 20 billion over coming two years.
The consumer durables company, which sells air conditioners, washing machines, light-emitting diode televisions, and refrigerators, said product sales are growing at a slower pace due to a delayed summer in the current year. The company is now hopeful that it may achieve momentum in sales as summer picks up.
"...there have been some issues in the southern markets because there has been a very delayed summer. I think there is anticipation of increased summer or decent summer at least in the northern parts of the market," Chairman and Managing Director Anil Rai Gupta said. "I think there is no panic right now in the market but definitely it is different than last year."
The company's net profit for the March quarter was INR 5.22 billion, up 16.35% on year. Revenue for the quarter rose 20.20% from last year to INR 65.32 billion. Revenue for 2024-25 (Apr-Mar) was 17.23% higher at INR 217.46 billion. Net profit was at INR 14.89 billion, up 16.94% from the previous year.
The management said the company's advertising spend would also remain focussed on strengthening its brand in the market. It does not plan to increase its advertising spend for now but may consider spending higher part of total advertising budget to promote certain products in its basket, depending on the need.
On the impact of business groups, Birla and Adani, entering into the company's mainstay cable and wire business, Gupta said going forward, the industry could go through further consolidation towards branded products, branded play and high-quality products. He said Havells would continue to invest and focus on strengthening its brand and distribution channels to enhance its reach.
In the analyst call post Oct-Dec earnings announcement, the company had said that its switchgears segment was impacted by a change in mix towards project businesses and factory under-absorption on account of plant relocation. The company had expected this to normalise in the coming quarters. Contrary to its expectations, the company continues to see muted demand, particularly from the industrial segment that has seen demand remain stagnant the entire year. It has, instead, gained more sales from the residential segment.
Pre-tax profit of the Llyod brand rose by nearly 214% on year to INR 1.2 billion in Jan-Mar and revenue from the branded business increased by 39.5% on year to INR 18.7 billion. The Llyod business accounted for 22.3% of the company's profit for the March quarter and nearly 29% of its revenue. The management said that Lloyd is its growth engine with no major headwinds ahead. The company said it would continue to invest in Lloyd with focus on maintaining decent growth and profitability.
As for the company's entry into solar panel business by announcing acquisition of 9.24% stake in Goldi Star for INR 6 billion, Gupta said it was a strategic investment. He said the company was looking at this venture to have a 'meaningful' presence in the solar renewable business and have supply surety. The company would stay focussed on residential and commercial segment for its solar business and stay away from venturing in to utility space, the management said.
Shares of the company Tuesday closed at INR 1,664.7 on the National Stock Exchange, up 1.1% from the previous day. End
Edited by Ashish Shirke
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