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Havells India Q1 Review – Expect Gradual Margin Improvement: Dolat Capital

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Havells India Ltd. revenue increased 62.6% YoY driven by 40% volume growth and 10- 12% pricing growth. On a three-year compound annual growth rate basis, all segments registered ~14- 18% revenue growth with ~9-10% volume growth.

Demand was weak in second half of May and June 2022 due to purchase deferment in business-to-consumer and business-to-business category (mainly infra and construction), on account of high costs.

Significant correction in commodity prices led to channel destocking in cables and wires.

Havells has indicated cables and wires contribution margins to normalise in Q3 FY23 with stability in raw material costs.

Ebitda margin took a sharp hit of 500 basis points due to the combined effect of passing on raw material cost reduction benefits in the cables and wires segment and inadequate price pass on and high advertising and promotion spends in Lloyd.

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