Havells investors to monitor valuations, Lloyd turnaround closely
Subscribe to enjoy similar stories. Shares of Havells India Ltd have fallen 6% after the company’s lacklustre September quarter (Q2FY25) results, weighed down by rising costs in raw materials, staffing, and advertising & promotion (A&P). The company, which reported earnings announced last week, saw its revenue grow 16.5% year-on-year.
Ebitda growth, however, remained under 2%, prompting analysts to cut earnings estimates by as much as 10%. Business-to-consumer (B2C) revenue rose 20%, buoyed by early festival season demand and recovery in rural markets, driving overall growth. In contrast, business-to-business (B2B ) sales grew just 9%, constrained by lower government spending, which the management expects to pick up in H2FY25.
Cables & wires, accounting for 35-40% of Havells' revenue, grew 23%, partly driven by restocking efforts. However, lighting revenue declined 1% due to pricing pressure, while switchgears recorded only 4% growth, impacted by weak industrial demand. Read this | Not cool enough: Bleeding Lloyd gives Havells a hard time Havells’ A&P expenses rose a steep 54%, driven by the early onset of the festival season this year, whereas staff cost grew 25%.
The management attributed the increase to investments in building retail channels, including in rural areas, and in R&D, and these should pay back in future. The company was also hit by significant volatility in commodity prices and had to absorb high-cost inventory in cables due to a sharp drop in prices. The management noted that competitive dynamics necessitate swift price reductions, though passing on price increases to consumers takes time.
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