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Havells India Q2 FY25 Results: 9.5% Net Profit Increase Despite Commodity Volatility

Havells India has reported a solid performance for the quarter ended September 30, 2024. The company posted a 9.5% increase in net profit, reaching ₹273 crore compared to ₹249 crore in the same period last year. Despite market volatility and pressures from fluctuating commodity prices, Havells has shown resilience, especially in its key product segments.

Revenue Growth Driven by Core Segments

Havells’ revenue from operations saw an impressive 16% year-on-year (YoY) increase, reaching ₹4,533 crore in Q2 FY25, up from ₹3,891 crore in Q2 FY24. This growth was fueled by strong performance across several segments, including cables, switchgear, and consumer durable products.

EBITDA for the quarter stood at ₹380 crore, marking a 1.7% YoY growth. However, the company noted that volatility in commodity prices, particularly copper and aluminum, impacted contribution margins, especially in the cables segment, which relies heavily on these raw materials.

Cable Segment: Strong Volume Growth Despite Challenges

The cables segment, which plays a vital role in Havells’ portfolio, saw robust volume growth. Revenue from this segment surged 23% YoY, reaching ₹1,805 crore in Q2 FY25, driven primarily by high demand for wires. The company also benefitted from a spillover effect from Q1, where destocking had limited growth. This rebound in Q2 helped offset some of the margin pressures caused by fluctuating input costs.

Switchgear: Steady Growth Despite High Base Effect

Havells’ switchgear segment, a core area of its business, delivered steady growth in Q2 FY25. The segment’s revenue rose 4% YoY, reaching ₹551 crore. The growth was primarily driven by domestic switchgear and switches, while the industrial switchgear (IP) segment faced challenges due to a higher base effect from large institutional orders secured in the previous year.

Lighting Segment: Volume Growth and Pricing Stability

The lighting segment continued to perform well, with volume growth remaining strong. The company reported that pricing within this segment has gradually stabilized, reflecting a more favorable market environment. Havells expects sustained growth in this area as demand continues to recover.

Consumer Durables: Festive Demand Boosts Growth

In the Electrical Consumer Durables (ECD) segment, Havells saw broad-based performance, thanks to the festive season driving demand for fans, small domestic appliances (SDA), and water heaters. According to the company’s investor presentation, the shift in the festive season this year also led to the advancement of advertising and promotional spending into Q2.

Key Challenges: Commodity Price Volatility

One of the major challenges faced by Havells in this quarter was the high volatility in commodity prices, particularly in raw materials like copper, aluminum, and steel. This volatility put pressure on margins, especially in the cable segment, which is heavily reliant on these inputs. The company has managed to navigate these challenges by focusing on volume growth and operational efficiency.

Investor Reaction and Market Performance

Despite Havells’ strong financial results, the market response was mixed. By 2:50 pm on October 17, Havells share price, Havells India’s shares were trading 4% lower at ₹1,859 per share on the Bombay Stock Exchange (BSE). The drop in share price could be attributed to broader market trends or investor caution in light of the company’s commentary on commodity price pressures.

Future Outlook

Looking ahead, Havells India is expected to continue its focus on volume growth, particularly in its core segments like cables, switchgear, and lighting. While commodity price volatility remains a concern, the company’s ability to capitalize on festive demand and improve operational efficiency should help mitigate these risks.

With a strong product portfolio and growing demand across multiple segments, Havells remains well-positioned to deliver steady growth in the coming quarters. Investors will be keenly watching how the company navigates the ongoing challenges in the commodity markets and whether it can maintain its momentum in the face of external pressures.

FAQs:

1.What was Havells India’s Q2 FY25 net profit?

A. Havells India posted a 9.5% increase in net profit at ₹273 crore in Q2 FY25, compared to ₹249 crore in the same period last year.

2.How much did Havells’ revenue grow in Q2 FY25?

A. The company’s revenue grew 16% YoY, reaching ₹4,533 crore in Q2 FY25, up from ₹3,891 crore in Q2 FY24.

3.What drove the growth in Havells’ cable segment?

A. The cable segment saw a 23% YoY revenue growth due to strong demand for wires and a spillover from Q1 destocking.

4.What were the main challenges for Havells in Q2 FY25?

A. High volatility in commodity prices, especially copper and aluminum, impacted margins in the cable segment.

5.How did Havells’ switchgear segment perform in Q2 FY25?

A. The switchgear segment grew 4% YoY, with strong performance in domestic switchgear, though industrial switchgear was impacted by a higher base effect.

6.How did the lighting segment perform in Q2 FY25?

A. The lighting segment saw sustained volume growth with pricing gradually stabilizing, contributing positively to overall performance.

7.What is Havells’ outlook for the coming quarters?

A. Havells is expected to focus on volume growth and operational efficiency to counteract commodity price volatility and continue growing its core segments.

8.What was the market reaction to Havells’ Q2 results?

A. Despite strong financial performance, Havells shares were trading 4% lower on the BSE by the afternoon of October 17, possibly due to market conditions.