Havells’ revenue grew by a third in the September quarter, its fastest growth in years, but profit rose only 11%. Most of the growth came from industrial cables and renewables rather than the consumer products the brand is known for.
Most Indian households know Havells for its fans, switches and lights. Its September-quarter results show a company that now depends more on industrial and infrastructure demand.
Net revenue rose 34.6% to ₹6,417 crore. The cables business grew 47.9% to ₹2,999 crore and now makes up close to half of total revenue. Renewables, still small, grew 148% to ₹329 crore. Switchgear grew 31.3% to ₹782 crore, helped by a domestic recovery and higher exports. Consumer durables, Havells’ traditional business, brought in about ₹1,072 crore.
The growth reflects where Indian demand is strongest. Power transmission, data centres, metro rail, housing and solar projects all need large amounts of cable, and government infrastructure spending is keeping that demand high. The core sector data released this week, with electricity output up 11.4% in September, points the same way. Havells is selling into the parts of the economy that are growing fastest.
Profit grew much more slowly. Net profit rose 11.1% to ₹353 crore on a standalone basis (₹349 crore consolidated), and EBITDA rose 30.5% to ₹576 crore. The EBITDA margin narrowed to 9.0% from 9.3%. Contribution margin, which measures profit after direct costs, fell to 18.2% of revenue from 20.1% a year ago.
The cables business explains most of the margin pressure. Cable prices are linked to copper and aluminium prices, and aluminium fell during the quarter, reducing margins on cable sales. Cables also earn lower margins than branded consumer products. As cables grow as a share of the business, Havells’ overall margin will tend to fall even if each segment is performing well.
Lloyd is still losing money
Lloyd, the air conditioner and appliance brand Havells bought in 2017, remains the weak spot. Revenue rose about 28% to roughly ₹615 crore, but the segment lost about ₹105 crore, much the same as a year earlier. The September quarter is a slow season for air conditioners, and Lloyd competes on price with many Indian and international brands, which makes it hard to earn a profit.
Havells spent much less on advertising this quarter. Advertising and promotion expenses were ₹136 crore, barely above ₹131 crore a year ago, and fell to 2.1% of revenue from 2.7%. In the June quarter, advertising had been 4.4% of revenue, during the peak summer selling season. Spending less on advertising helped profit this quarter, but it is not a lasting source of margin improvement.
The half-year results show the trade-off clearly. Revenue for April to September rose 26.7% to ₹12,927 crore, but net profit fell 2.8% to ₹651 crore. Havells is growing quickly, but in businesses that earn less per rupee of sales.
The company is not in trouble. It has ₹1,190 crore in cash and strong demand across most of its segments. But investors who value Havells as a consumer brand with premium margins may need to reconsider. Its future depends more on infrastructure spending and metal prices than on household consumption.
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