HAVELLS Q4 Call Highlights: Wires Thrive, Fans Stumble, Lloyd Delivers!

Havells India Ltd, a major Fast Moving Electrical Goods (FMEG) company and power distribution equipment manufacturer, in its Q4 earnings call highlighted robust 20% growth in cables and wires, driven equally by value and volume, despite new competitors, with a focus on brand building to counter market dynamics. A delayed summer impacted fan sales, but the AC business thrived, while Lloyd achieved INR100 crore EBITDA, with ongoing investments in brand and refrigerator manufacturing to sustain growth. A INR600 crore investment in Goldi Solar was deemed critical for securing renewable energy supply and scaling the INR400-450 crore solar business. International expansion is gaining traction in developed markets like the US and Europe, aiming for significant growth from the current 3.5% of revenue. Havells anticipates operating leverage to restore normalized margins of 13-14%, supported by a INR2,000 crore capex plan over two years, while addressing slower industrial switchgear growth through long-term product development.

Havells India reported strong Q4 FY25 performance with consolidated revenue growing 20.2% year-over-year to INR6,543.56 crore, while net profit increased 15.7% to INR517.83 crore, exceeding market expectations. The growth was driven by robust performance across segments, particularly in Cables & Wires and Electrical Consumer Durables, which grew by 14% and 21% respectively. The Lloyd consumer business focusing on air conditioners grew by 6%. EBITDA rose 19.3% year-over-year to INR757 crore, though margins slightly contracted to 11.6% from 11.7% due to product mix changes and input cost pressures. Strategic initiatives included a INR600 crore investment in Goldi Solar for renewable energy and a INR380 crore cable capacity expansion in Alwar.

Continue Reading: Unearth the Vital Insights from Havells India Ltd.’s Earnings Call!

Financial/Operational Metrics:

• Revenue: INR6,532 crores, up 20.2% YoY.
• Net Income: INR517 crores, up 15.7% YoY.
• EPS: INR8.33, up 16.3% YoY.
• Total Expenses: INR5,894 crore, up 20.1%.
• EBITDA: INR706 crore, up 17.4% YoY.

Outlook:

• Lloyd Profitability: Targeting sustainable mid-to-high single-digit margins.
• International Expansion: Expected to grow significantly in 2–3 years.
• Solar Strategy: Strategic focus on scaling the solar business via Goldi Solar investment.

 

Analyst Crossfire:

• Cable Contribution Margin Decline & Potential AC Price Cuts (Natasha Jain – Phillip Capital)? The decline in cable contribution margin YoY and QoQ, despite rising copper prices, was attributed to product mix changes and volatility in wire prices, not indicative of a normal trend, with new cable capacity and muted domestic power system growth contributing. No panic in the AC market despite a delayed summer in southern markets, with recent northern summer onset reducing distress sale risks, though southern market challenges persist (Anil Rai Gupta – Chairman and MD).

 

• Lloyd Profitability and Cost Savings, Goldi Solar Investment Outlook (Rahul Agarwal – Ikigai Asset)? Lloyd’s INR100 crore EBITDA reflects cost savings and scale benefits, but ongoing investments in brand upliftment and R&D for premium products will balance growth and profitability, with no immediate margin surge expected. The INR600 crore investment in Goldi Solar aims to scale the INR400–450 crore solar business multifold, focusing on consumer and commercial segments without heavy manufacturing focus, leveraging scale and technology changes (Anil Rai Gupta – Chairman and MD).

 

• Cable and Wire Competition Strategy, Budget Impact and Price Hikes (Aniruddha Joshi – ICICI Securities)? Facing new entrants, Havells sees organized competition as positive, continuing investments in brand building, distribution, and technological advancements to maintain leadership in cables and wires. Budget tax incentives and RBI measures should boost consumer demand, with Havells adjusting prices dynamically due to raw material volatility, prioritizing margin stability over price hike-driven gains (Anil Rai Gupta – Chairman and MD).

 

• Consumer Demand Outlook, Cable Demand and Pricing (Renu Baid – IIFL Capital, Atul Lohade – Nuvama)? Despite slowed growth, consumer demand is expected to improve with budget changes, though real estate demand sustainability remains a concern amid inflationary pressures. Cable demand remains strong, but raw material price fluctuations in the last 3–4 months have impacted pricing and margins, with no significant demand slowdown observed (Anil Rai Gupta – Chairman and MD).

 

• Industrial Switchgear Strategy, Lloyd Channel Mix and Capex Plans (Amit Achhipalia – UBS, Girish Achyapala – Morgan Stanley)? Industrial switchgear lags due to low market share and historical focus on residential; recent investments aim for long-term competitiveness, though approvals create barriers. Over 50% of Lloyd sales now come from organized retail, with a shift from traditional channels; no major capex planned post-refrigerator investment, with INR2,000 crore total capex over two years, including R&D (Anil Rai Gupta – Chairman and MD).