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Commodity price volatility impacting margins
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Havells India Limited — Q2 FY25
Havells India reported a healthy Q2 FY25 performance driven by improved consumer demand and early festive season pickup.
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Havells India reported a healthy Q2 FY25 performance driven by improved consumer demand and early festive season pickup. Revenue growth was supported by strong performance in wires, B2C segments, and emerging categories like personal grooming and water purifiers. However, EBITDA margins were impacted by volatility in commodity prices affecting cables and wires, and increased advertising spend due to the earlier Diwali. Management expects margin normalization from Q3 onwards. The new cables plant in Tumkur was commissioned, with an additional INR 450 crore capex committed for expansion. Lloyd delivered decent growth with non-AC products gaining traction. Key risks include sustained commodity price volatility and slower-than-expected recovery in industrial demand. Overall, the company remains cautiously optimistic about demand recovery but faces near-term margin headwinds.
हैवेल्स इंडिया ने Q2 FY25 में अच्छा प्रदर्शन किया। ग्राहकों की मांग बढ़ी और त्योहारी सीजन जल्दी शुरू होने से बिक्री बढ़ी। तार, घरेलू उत्पाद, और नए उत्पाद जैसे पर्सनल ग्रूमिंग और वॉटर प्यूरीफायर ने अच्छा काम किया। लेकिन कच्चे माल की कीमतों में उतार-चढ़ाव और दिवाली पर ज्यादा विज्ञापन खर्च के कारण मुनाफा कम हुआ। कंपनी को उम्मीद है कि Q3 से मुनाफा सामान्य हो जाएगा। तुमकुर में नया तार कारखाना शुरू हुआ और विस्तार के लिए 450 करोड़ रुपये का निवेश किया जाएगा। लॉयड ने अच्छी बढ़त दिखाई, खासकर एसी के अलावा अन्य उत्पादों में। मुख्य जोखिम हैं कच्चे माल की कीमतों में उतार-चढ़ाव और औद्योगिक मांग में धीमी रिकवरी। कुल मिलाकर, कंपनी मांग सुधार को लेकर सावधानी से आशावादी है, लेकिन निकट भविष्य में मुनाफा कम रह सकता है।
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B2C Growth
20%
+20% YoY
B2C segment grew 20% year-over-year in Q2 FY25, outperforming B2B growth of 9%.
Cables & Wires Volume Growth
15%
+15% YoY
Volume growth in cables and wires was 15% in Q2, with value growth at 22% due to price fluctuations.
Lighting Volume Growth
15%
+15% YoY
Lighting segment reported 15% volume growth in Q2, with management expecting pricing bottoming out by Q4.
CapEx Guidance FY25
INR 1,000 Cr
N/A
Management guided CapEx of ~INR 1,000 crore for FY25, with INR 350 crore already spent in H1.
What Changed vs Last Quarter
NEW
Cables & Wires margins to normalize by Q4 FY25
Management expects cables and wires margins to return to normalized levels by Q4 FY25, assuming no further commodity volatility.
NEW
Lighting pricing bottoming out by Q4 FY25
Management expects lighting pricing to bottom out by Q4 FY25, with real growth returning in FY26.
NEW
Switchgear margins to remain 22-25%
Management expects switchgear EBIT margins to remain in the 22-25% range over the medium term.
UPDATED
CapEx of INR 1,000 crore for FY25
Management expects total CapEx of approximately INR 1,000 crore for FY25, with INR 350 crore already incurred in H1.
DROPPED
Lloyd's profitability to improve over time
Management expects continued improvement in Lloyd's profitability driven by premiumization, cost efficiencies, and operating leverage, but did not provide a specific margin target.
DROPPED
Export approvals to be completed in 9-12 months
Management expects to have a full bouquet of approvals for cables and HVAC exports to the US within 9-12 months.
NEW RISK
Commodity price volatility impacting margins
Fluctuations in copper and other raw material prices could continue to pressure cables and wires margins if volatility persists.
NEW RISK
Slow industrial demand recovery
Industrial switchgear and B2B segments are experiencing degrowth, and a delayed recovery could weigh on overall growth.
NEW RISK
Festive demand may be restocking-led
Analyst raised concern that strong festive demand could be driven by channel restocking rather than end-consumer demand, which may not sustain.
NEW RISK
Employee cost growth may persist
Employee costs have been rising 20-25% annually due to investments in R&D and channel expansion, which could pressure margins if revenue growth slows.
RISK GONE
Sustained weak consumer demand in ECD
Management expressed caution on consumer demand recovery, noting that the strong Q1 growth may be a one-off due to summer and low base, and underlying demand remains uncertain.
RISK GONE
Competitive intensity in switches and switchgear
Analyst raised concern about increased competition from national players offering longer credit periods and wider SKU ranges, which could pressure margins.
RISK GONE
Raw material volatility impacting wires revenue
Sharp commodity price decline in June 2024 led to channel destocking, impacting wires revenue. Management noted normalization in July but risk remains if volatility continues.
🤫 Topics management stopped discussing
Mentioned in Q2 FY24, Q3 FY24, Q4 FY24
New cable capacity will be commissioned in June 2024, with benefits expected in the second half of FY25.
Mentioned in Q2 FY24, Q3 FY24
Lloyd's profitability will improve through multiple cost levers including procurement efficiency, plant optimization, and premiumization.
Mentioned in Q1 FY24, Q1 FY25
Management expects continued improvement in Lloyd's profitability driven by premiumization, cost efficiencies, and operating leverage, but did not provide a specific margin target.
Mentioned in Q1 FY24, Q2 FY24
Increased competition and discounting in the ECD segment, especially fans, could pressure margins and market share.
Mentioned in Q1 FY25, Q2 FY24
Management expressed caution on consumer demand recovery, noting that the strong Q1 growth may be a one-off due to summer and low base, and underlying demand remains uncertain.
Fast read
Guidance and risk preview
Management expects total CapEx of approximately INR 1,000 crore for FY25, with INR 350 crore already incurred in H1.
Fluctuations in copper and other raw material prices could continue to pressure cables and wires margins if volatility persists.
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