Havells India Limited reported its financial results for the June quarter, revealing a notable drop in net profit despite a robust increase in operational revenue. The company's consolidated net profit fell by 15.4% year-on-year to ₹298 crore, down from ₹352 crore in the corresponding quarter last year.
Conversely, revenue from operations climbed impressively by 20% to ₹6,510 crore, compared to ₹5,437 crore in the same period of the previous fiscal year. This divergence highlights a challenging quarter for profitability, primarily attributed to heightened advertising and promotional (A&P) expenditures, alongside ongoing investments in brand building, distribution expansion, and capacity enhancement.
Operating Performance Under Pressure
The company's operating performance reflected the margin pressures. Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) decreased by 8.8% year-on-year, settling at ₹474 crore from ₹520 crore a year ago. Consequently, the EBITDA margin contracted by over 200 basis points, falling to 7.3% from 9.6% in the prior-year quarter.
Havells noted in its investor presentation that elevated A&P spending during the first quarter significantly impacted margins across all business segments. However, the company remains optimistic about future profitability, citing recent price hikes and an anticipated moderation in advertising and promotional expenses.
Segment-wise Performance Highlights
- Switchgears: Revenue for this division saw a 3.5% year-on-year decline, reaching ₹608 crore.
- Cables: This segment emerged as the strongest performer, with revenue soaring 27% year-on-year to ₹2,456 crore, driven by healthy demand and optimal capacity utilisation.
- Lighting & Fixtures: Revenue increased by 4.5% year-on-year to ₹390 crore.
- Electrical Consumer Durables: This business posted a 12% growth, generating ₹1,113 crore in revenue.
- Lloyd Consumer: Registered a 15.7% increase in revenue compared to the year-ago quarter.
- Renewables: Delivered exceptional growth, with revenue more than tripling from the corresponding period last year.
In a strategic move, Havells also announced plans to expand its cable manufacturing capacity. The company intends to invest approximately ₹255 crore to boost the annual cable production capacity at its Vasanthnarasapura Industrial Area facility in Karnataka. The expansion aims to increase capacity from the current 4.59 lakh kilometres to 7.34 lakh kilometres. This project is slated for completion by December 2027 and will be financed entirely through internal accruals.