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Havells India Limited — Q2 FY26
Havells India reported a mixed Q2 FY26, with summer product weakness (ACs, fans, coolers) dragging performance and elevating channel inventory, which management expects to normalize by Q3 end.
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Havells India reported a mixed Q2 FY26, with summer product weakness (ACs, fans, coolers) dragging performance and elevating channel inventory, which management expects to normalize by Q3 end. Cables maintained steady growth, supported by power cables and capacity expansion. Lighting saw LED price stabilization and early residential demand pickup. EBITDA margins for Havells standalone remained around 12-13%, with management confident of 150-200bps expansion over time through productivity and premiumization. Lloyd's contribution margins were impacted by consumer schemes to clear inventory, but improvement is expected from Q4. GST cuts on ACs, TVs, and solar are seen as sentiment boosters. Key risk: elevated channel inventory and working capital may persist longer than anticipated, pressuring cash flows and margins.
हैवेल्स इंडिया ने दूसरी तिमाही में मिला-जुला प्रदर्शन दिखाया। गर्मियों के उत्पाद (एसी, पंखे, कूलर) कम बिके, जिससे दुकानों पर माल ज्यादा बच गया। कंपनी को उम्मीद है कि तीसरी तिमाही के अंत तक यह सामान्य हो जाएगा। केबल का कारोबार अच्छा चला, खासकर पावर केबल और क्षमता बढ़ने से। एलईडी की कीमतें स्थिर हुईं और घरों में मांग बढ़ने लगी। हैवेल्स का मुनाफा (EBITDA) 12-13% के आसपास रहा, और कंपनी का कहना है कि बेहतर उत्पाद और काम करने के तरीके से यह 1.5-2% और बढ़ेगा। लॉयड ब्रांड पर छूट देने से मुनाफा कम हुआ, लेकिन चौथी तिमाही से सुधार की उम्मीद है। एसी, टीवी और सोलर पर जीएसटी कटौती से बाजार में उत्साह बढ़ेगा। मुख्य जोखिम: दुकानों पर ज्यादा माल और कारोबारी पूंजी का दबाव लंबे समय तक रह सकता है, जिससे नकदी और मुनाफा प्रभावित होगा।
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Cables & Wires Contribution Margin
15-16%
Improved vs depressed year-ago quarter
Management indicated 15-16% is the right contribution margin for cables and wires, benefiting from rising copper prices.
Switchgear EBIT Margin Range
37-40%
Stable sequentially
Switchgear margins remain in the 37-40% range, depending on product mix.
CapEx FY26
INR 1,450 crore
Higher than FY25
CapEx for FY26 is guided at INR 1,450 crore, with FY27 estimated at INR 1,000 crore.
VLDC Fan Mix
~40%
Increasing penetration
Almost 40% of fans sold are now VLDC (variable speed) fans, reflecting premiumization.
What Changed vs Last Quarter
NEW
Channel inventory normalization by Q3 end
Management expects elevated channel inventory for summer products (ACs, fans, coolers) to normalize by the end of Q3 FY26.
NEW
Lloyd contribution margin improvement from Q4
Lloyd's contribution margins, impacted by consumer schemes, are expected to start improving in Q3 with real effects in Q4.
NEW
CapEx of INR 1,450 crore for FY26
Capital expenditure for FY26 is guided at INR 1,450 crore, primarily for capacity expansion in cables and other segments.
NEW
Havells standalone EBITDA margin expansion of 150-200bps
Management reiterated confidence in expanding Havells standalone EBITDA margins by 150-200 basis points over time through productivity and premiumization.
DROPPED
Cable capacity doubling by FY27
Havells is doubling underground cable capacity from FY24 to FY27 with additional CapEx of INR 340 crore announced this quarter.
DROPPED
Solar revenue target of INR 1,000-1,500 crore
Management expects solar business revenue to cross INR 1,000-1,500 crore in the next couple of years, up from ~INR 500 crore in FY25.
DROPPED
Switchgear contribution margin target 38-40%
Management aims to maintain switchgear contribution margins in the 38-40% range, with sequential improvement expected.
DROPPED
Cables & wires contribution margin aspiration 14-15%
Management expects cables and wires contribution margins to remain in the 14-15% range, with potential upside from operating leverage.
NEW RISK
Competitive intensity from new entrants
Analyst raised concern about LG's aggressive pricing in mass-premium segments, which could pressure Lloyd's market share and margins.
NEW RISK
Under-absorption of manufacturing overheads
Lower production due to inventory correction led to under-absorption, impacting contribution margins in ECD and Lloyd.
NEW RISK
GST reduction not fully passed on due to BEE norm changes
Price increases from new BEE norms (Jan 2026) may offset GST benefits, potentially dampening consumer demand.
RISK GONE
Potential price discounting in Lloyd ACs
Analyst raised concern about competitive discounts; management stated they avoid short-term discounting but inventory overhang may force price cuts.
RISK GONE
BEE norm transition risk for AC inventory
New BEE norms effective January 2026 could require liquidation of older inventory, potentially impacting margins in coming quarters.
RISK GONE
Subdued consumer demand in core categories
Tepid consumer demand in switchgear, lighting, and ECD (excluding cooling) persisted; recovery dependent on festive season and real estate pickup.
🤫 Topics management stopped discussing
Mentioned in Q2 FY25, Q3 FY25
Switchgear EBIT margins expected to recover to 23-24% from current 18% as plant relocation and mix issues resolve.
Mentioned in Q2 FY25, Q4 FY25
Continued volatility in copper and other raw material prices, driven by global uncertainties, poses an overhang on margins, especially in cables and wires.
Mentioned in Q1 FY25, Q3 FY25
Consumer demand showed weakness around Diwali and recovery is uncertain; if weakness persists, revenue growth may be impacted.
Fast read
Guidance and risk preview
Management expects elevated channel inventory for summer products (ACs, fans, coolers) to normalize by the end of Q3 FY26.
High inventory levels for ACs, fans, and coolers could take longer to clear than expected, impacting primary sales and working capital.
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