Havells India Expects Margins To Normalise By March After Q2 Decline, Says Chairman Anil Rai Gupta

Havells India Ltd. expects its margins to normalise by the fourth quarter of the current financial year after a 130 basis points drop year-on-year in the second quarter of fiscal 2025, despite a growth in net profit and revenue.

Anil Rai Gupta, chairman and managing director of Havells India, said the contraction in margins could have happened because of a 50% increase in ad-spends. Additionally, a fluctuation in commodity prices also affected the company’s margins in the domestic wire business. Gupta projected that margins were likely to normalise in the upcoming quarters.

“We are quite satisfied with the overall growth performance in all the segments, including Lloyd. The positive aspect is that the core business of Havells is also faring well," Gupta told NDTV Profit.

In this particular quarter, expenses for advertising went up. This is also because of the early Diwali season and advancing of the expenses on advertising, according to him. "We see an overall 50% jump in ad-spends in the quarter. There was a sharp fluctuation in commodity prices which affected margins in the domestic wire business. But, that is a one-off, and we should be expecting normalised margins,” Gupta said.

Gupta expected overall margins to normalise latest by the fourth quarter of the ongoing fiscal with the targeted 13-14% margins in the company’s core business.

“We look at Lloyd separately and Havells core separately. We are always targeting between 13% and 14% for Havells core. I think we should be coming back to it, if not in the third quarter at least in the fourth quarter,” Gupta said.

Havells India announced its results for the quarter and six-month period ended September 2024 on Thursday. The company’s net profit rose 7.5% YoY to Rs 268 crore in the second quarter. Its revenue from operations increased 16.4% on a yearly basis to Rs 4,539 crore during the period. The electrical appliance maker’s margins for the quarter under review contracted to 8.3% as against 9.6% in the corresponding quarter a year ago, declining 130 basis points (bps) YoY.

Gupta added they were eyeing decent revenue growth, on the back of residential demand and festive demand. He added that the channel expansion and product addition by the company are also likely to contribute to revenue growth.

“We have grown at about overall 14-14.5%, so we are expecting a decent growth. The markets are overall looking positive, residential demand is coming in a little bit and we are yet to see the festive season demand. There are a lot of activities going on in terms of channel expansion and product addition so we should be expecting good growth in the coming times,” he said.

Gupta added that the company’s home appliances business under the Lloyd brand was expected to add 20% to its overall revenue in FY25.

“With the growth expected in Lloyd, we are looking at about 20% revenue contribution to Havells India revenue. I think it has become a sizeable part of Havells revenue,” Gupta said.

The company is increasing its expenses in research and development, capital expenditure and in building distribution channels in newly electrified rural and semi urban areas to boost growth, according to Gupta.

“We are increasing expenses on product innovation and on R&D. This is not just to increase sales, but customer expectations are also rising towards premium products, hence, there is a lot of investment in R&D. On the other hand, capex investments are going on to take care of future growth. Thirdly, with rural areas getting electrified, there is a huge investment going towards channel build-up in semi urban and rural areas,” Gupta revealed.

Shares of Havells India traded at Rs 1,847.3 apiece, up by 2.31%, on the NSE at 11:38 a.m. on Friday, while the benchmark Nifty traded flat at 24,740.45, down by 0.04%.