Robust Sales were regained in Q4 with good performance across verticals. Sustained inflation impacts the margins, expecting it to improve with the calibrated price increase and cost optimization | Havells Q4 FY22 Conference Call Highlights

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  • Q4FY22: Revenue from operations was up 32.5 percent to Rs 4,426 Cr during the period under review as against Rs 3,339 Cr in the Q4FY21. 16% increase in its consolidated net profit to Rs 352 Cr for the fourth quarter ended in March 2022 as compared to Rs 303.83 Cr in the Q4FY21.
  • FY22: Net profit was up 14.57 percent at Rs 1,196.47 Cr as compared to net profit of Rs 1,044.31 Cr for FY21. Its revenue from operation was at Rs 13,938.48 Cr in 2021-22 which is 33.28 per cent higher than Rs 10,457.30 Cr in FY21.
  • Revenue from the Switchgears segment was Rs 474.51Cr, up 2.41 per cent as against Rs 463.33 Cr in the Q4FY21. Its cables segment was at Rs 1,488.10 Cr, up 44.58 per cent, as against Rs 1,029.20 Cr of Q4 FY21. Revenue from lighting and fixtures in Q4 FY21 was up 20.3 per cent to Rs 405.23 Cr, against Rs 336.7 Cr in the Q4FY21. Electrical consumer durables (ECD) were up 22.50 per cent to Rs 872.72 Cr as against Rs 712.38 Cr in Q4 FY21. Revenue from Lloyd Consumer, a company which Havells had acquired in 2017, was 62.48 per cent to Rs 959.58 Cr during the quarter as against Rs 590.57 Cr. Revenue from ‘Other Segment’ was at Rs 226 Cr, up 9.24 per cent, as against Rs 207 Cr.
  • Margin: EBITDA margin in FY22 is 12.7% as compared to 15% in FY21. The renewed cost escalation in commodity owing to Ukraine crisis, partially nullified price increase. Lighting margins affected by rising costs not fully passed on. Lloyd was impacted by sustained competitive intensity and inadequate price increases.
  • Working capital reverting to normalized levels
  • Capex plans for FY23 (700-800 Cr): 300-350 Cr will be for AC segment. Capex largely pertains to new setup for Washing Machine, AC Controllers and capacity enhancements in Water heater and Air conditioners units.
  • Revenue mix of Lloyd is 80-85% AC while remaining comes from Refrigerators and Washing Machines.
  • Volume growth of ECD is 15% during the quarter.
  • Demand is still strong in spite of raw material inflation, although company has not been able to pass on the price hikes to the consumers effectively due to highly competitive intensity especially in Lloyd AC segment. Lloyd segment growth was because of pent up demand because of the previous two years this season was affected by covid, summer at its peak, distribution, rebranding and manufacturing facility ramp up of the Lloyd in the past 2 to 3 years. 70-80% of AC sales are inverter based. The operating leverage for the Lloyd segment will kick in if the revenues that the company has generated in this quarter continues on a regular basis and further growth in the revenues in this segment.
  • One- third of lighting comes from B2B sales which are high margin business and not the low margin end due to which growth is slower in this area as company is selective in its approach to take only those projects which are margin accretive.
  • Others segment consists of electric motors (highest contribution), water purifiers, domestic pumps, personal grooming, solar, etc.
  • Exports: To be about 10% of the revenues in the medium term. Strong traction is seen across the product categories, especially in AC, switch gears, cables and wires segments.
  • Over the 4 to 5 years horizon company will further increase its focus towards technology, manufacturing, branding and distribution which are the important areas for any consumer durables company to be successful.

Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell stocks or MF.

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