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Nirmal Bang Report
Havells India Ltd. reported Q3 FY23 revenue of Rs 41.2 billion, up 12.8% YoY (three-year compound annual growth rate of 22%), 2.1%/1.8% above our/consensus estimates on the back of healthy growth across all business verticals.
Switchgears/cables/lighting and fixtures/electrical consumer durables /Lloyd grew by 3.7%/17.1%/3%/4.7%/30.3% YoY. Gross margin expanded by 70 bps YoY to 33% due to the easing of commodity cost pressures.
Havells' Ebitda declined by 3.8% YoY to Rs 4.2 billion. Ebitda margin contracted by 180 bps YoY to 10.3%, which was above our estimate of 8.5%, but below consensus estimate of 10.6%. Ebitda margin improved by 250 bps QoQ mainly due to recovery in cables segment margin post liquidation of high-cost inventory.
Contribution margins expanded across segments due to stability in raw material prices during the first half of Q3 FY23. Consequently, the profit after tax declined by 7.2% YoY to Rs 2.8 billion. The bottom-line was above our estimate by 25%, but below consensus estimate by 1.8%.
The management highlighted that muted business-to-consumer demand affected consumer facing businesses. Further, raw material cost volatility started increasing from the second half of Q3 FY23.
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