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Havells India Limited — Q3 FY24
Havells India reported a mixed Q3 FY24 with muted consumer demand offset by sustained B2B infrastructure spends.
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Havells India reported a mixed Q3 FY24 with muted consumer demand offset by sustained B2B infrastructure spends. Lighting delivered strong volume growth but value was impacted by price deflation; margins improved 153bps YoY due to normalization after a fire incident. The ECD segment saw muted growth due to a high base in fans, while Lloyd posted 18% two-year CAGR and gained market share, though A&P spends weighed on segment profitability. Management noted green shoots in B2C demand and expects a strong summer season given low channel inventory. Key risks include persistent price erosion in lighting and competitive intensity in RAC. The company formed a US subsidiary for HVAC distribution, signaling long-term export ambitions.
हैवेल्स इंडिया ने तीसरी तिमाही में मिला-जुला प्रदर्शन दिखाया। आम ग्राहकों की मांग कमजोर रही, लेकिन बड़े कारोबारों (B2B) के बुनियादी ढांचे पर खर्च बना रहा। लाइटिंग में बिक्री की मात्रा बढ़ी, लेकिन कीमतें गिरने से कमाई पर असर पड़ा। आग लगने के बाद हालात सामान्य होने से मुनाफा 153 आधार अंक बढ़ा। पंखों की पिछली साल की अधिक बिक्री के कारण ECD खंड में वृद्धि कम रही। लॉयड ने दो साल में 18% की दर से बढ़ोतरी दिखाई और बाजार हिस्सेदारी बढ़ाई, लेकिन विज्ञापन खर्च से मुनाफा कम हुआ। प्रबंधन का कहना है कि ग्राहक मांग में सुधार के संकेत हैं और गर्मी के मौसम में अच्छी बिक्री की उम्मीद है। मुख्य जोखिम लाइटिंग में कीमतों की गिरावट और एसी बाजार में कड़ी प्रतिस्पर्धा है। कंपनी ने अमेरिका में एचवीएसी बिक्री के लिए सहायक कंपनी बनाई है, जो निर्यात की योजना दिखाती है।
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Risk Intelligence
Price deflation in lighting continues to impact value growth
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Read Transcript →Quarter Snapshot
Lloyd two-year CAGR
18%
+18% over 2 years
Lloyd delivered 18% CAGR over two years, indicating strong market share gains despite a weak season.
Lighting margin improvement
153bps
+153bps YoY
Lighting segment margins improved 153bps YoY, driven by normalization after a fire and focus on innovation.
Channel inventory for summer products
Lower than last year
Lower YoY
Channel stocking for fans and ACs is lower than last year, reducing risk of excess inventory.
E-commerce salience
~5%
Stable
E-commerce contributes about 5% of revenue, with margins similar to offline channels.
What Changed vs Last Quarter
NEW
Expect normalcy in B2C demand and strong summer season
Management expects B2C demand to improve due to low base and abating inflation, with a strong summer season for fans and ACs.
NEW
Capex for underground cables capacity expansion of 25%
Havells is investing INR 300 crore to increase underground cable capacity by 25%, with a new plant in the south.
UPDATED
Lloyd margin improvement through cost efficiencies
Lloyd's profitability will improve through multiple cost levers including procurement efficiency, plant optimization, and premiumization.
DROPPED
CapEx of INR 600 crore for FY24
Management guided capital expenditure of INR 600 crore for the current fiscal year, primarily for cable and Lloyd capacity expansion.
DROPPED
Cable capacity expansion of 25%
Cable manufacturing capacity will be expanded by 25% to address current constraints and support growth.
NEW RISK
Price deflation in lighting continues to impact value growth
Despite strong volume growth, price erosion in lighting has led to value degrowth, which may persist if competition intensifies.
NEW RISK
Lloyd's path to profitability uncertain
Analysts repeatedly questioned Lloyd's margin trajectory; management deflected with long-term commentary, indicating near-term visibility is low.
NEW RISK
Potential price war in RAC due to capacity additions
New capacities from multiple players and PLI incentives could lead to pricing pressure, though management downplayed this risk.
RISK GONE
Sustained consumer demand weakness
Consumer demand remained soft in Q2, and if the anticipated H2 recovery does not materialize, revenue growth could disappoint.
RISK GONE
Lloyd losses and margin pressure
Lloyd's losses expanded due to under-absorption of overheads from new capacity; margin improvement may be slower than expected.
RISK GONE
Competitive intensity in ECD and fans
Increased competition and discounting in the ECD segment, especially fans, could pressure margins and market share.
RISK GONE
Capacity constraints in cables
Cable capacity constraints limited growth; if expansion is delayed, Havells may lose market share to competitors.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q2 FY24
Management guided capital expenditure of INR 600 crore for the current fiscal year, primarily for cable and Lloyd capacity expansion.
Mentioned in Q1 FY24, Q2 FY24
Increased competition and discounting in the ECD segment, especially fans, could pressure margins and market share.
Fast read
Guidance and risk preview
Management expects B2C demand to improve due to low base and abating inflation, with a strong summer season for fans and ACs.
Despite strong volume growth, price erosion in lighting has led to value degrowth, which may persist if competition intensifies.
View Risks →