Havells India has flagged another round of price hikes in the December quarter as it looks to offset persistent raw material inflation, after raising prices across product categories by 10-25% over the past year. The electrical goods manufacturer expects the next round of hikes to range between 5-7%, depending on the product category, Chairman and Managing Director Anil Rai Gupta said during the company's pos-Q2 earnings call on Thursday.
The company has already taken measured pricing actions over the past year to protect profitability amid higher input costs. Over the past 12 months, price increases in cables and wires have exceeded 30%, while increases in some other categories have ranged between 10% and 15%, Gupta said.
This also comes as Havells enters the festive season with a positive outlook on demand and margins, despite continued uncertainty around commodity prices, as per the management.
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Management now expects pricing actions to flow through. In the Lloyd consumer durables business, margins remain under pressure from raw material inflation and seasonal under-absorption, with some cost increases yet to be passed on to consumers. Gupta said the impact of pricing actions should begin to flow through in the third quarter and continue into the fourth quarter.
The company is also focusing on cost efficiencies across factories and overheads. However, management indicated that some input-cost increases will need to be passed on through higher prices.
Q2 Earnings Show Revenue Growth
Havells India reported an 11.4% year-on-year increase in consolidated net profit to Rs 353 crore for the September quarter, compared with Rs 317 crore a year earlier. Revenue rose 34.6% to Rs 6,417 crore from Rs 4,767 crore in the year-ago quarter, according to its notification to the exchanges on Thursday.
Cables business revenue rose 48% year-on-year to Rs 3,000 crore, while segment earnings before interest and tax (EBIT) increased 9% to Rs 304 crore. Electrical Consumer Durables revenue grew 11% to Rs 1,072 crore. EBIT rose 34% to Rs 67 crore. Lloyd Consumer revenue increased 28% to Rs 615 crore. The business reported a segment loss of Rs 104 crore, compared with Rs 99 crore a year earlier.
Contribution margins, however, were softer year on year, primarily because of the cables business, where aluminium price movements affected performance against a strong base. Havells said first-half cable contribution margins were around 15%, broadly in line with its long-term average.
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