Havells India Ltd reported a 20% year-on-year revenue increase for the June quarter (Q1FY27), reaching ₹6,518 crore. However, the company's Ebitda margin fell by 230 basis points to 7.2%, primarily due to increased advertising and sales promotion expenses, which doubled to ₹286 crore compared to the previous year.
Key Details
The management indicated that A&P spending is expected to normalize, targeting 2.7%-2.8% of revenue for FY27, aligning with historical averages. The company has implemented staggered price hikes across its product segments to mitigate raw material inflation, which averaged 7%-8% overall, with some categories experiencing increases of up to 20%. According to Nuvama Research, Havells is projected to achieve strong double-digit revenue and Ebitda growth in Q2 and Q3, although this is based on a low comparison base from the previous year.
In terms of segment performance, cables revenue grew by 27% year-on-year to ₹2,455 crore, while the newly established renewables business saw a significant revenue increase of 236% to ₹314 crore, driven by demand for solar products. However, switchgear revenue declined by 4% due to export disruptions linked to the ongoing conflict in West Asia. Lloyd, another segment of Havells, recorded a 15% growth but remained in the red due to higher A&P spending and delayed seasonal demand.
Background
Market analysts have adjusted their earnings estimates following the Q1 results. Motilal Oswal Financial Services reduced its Ebitda forecasts for FY27 and FY28 by approximately 6% and 8%, respectively, resulting in an expected earnings per share decrease of about 8% and 10%.
Havells' margin decline and increased expenses could impact investor sentiment, particularly in the consumer goods sector. The company's pricing strategies and cost management will be closely monitored as they may influence future profitability. Investors will watch for the upcoming Q2 results, which are expected to reflect the effects of the company's strategic adjustments.