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Havells revenue at Rs 48.2b (+14% YoY) stood marginally above estimate supported by betterthan-expected performance in Lloyds (+20% YoY) and cables and wires (+24% YoY), while, switchgears (+5% YoY), ECD (+5% YoY) & Lighting (-1% YoY) performance was marginally lower. Softening commodity prices although not fully reflected resulting in Gross margins of 30.4% (+140bps YoY). Advertising exp stood at Rs1.3b (2.8% vs 2.7% in 1QFY23; 2.3% in 4QFY23). EBITDA at Rs 4.02b (+11% YoY) stood below our estimate impacted by lower than estimated gross margins and higher than expected other expense (14.7% of sales vs exp. of 13.2%). EBITDA margin at 8.3% (-20bps YoY). EBIT margins for the Core Business stood at 13.5% (+60bps YoY) and for Lloyd stood at -4.7% vs -5.2% in 1QFY23. PAT at Rs 2.87b (+18% YoY). Management indicated that its core portfolio (Cables & Wires, Switchgear etc) to continue its growth propelled by strong momentum in construction and infrastructure industry. Fans adversely impacted in CY22 due to transition towards energy efficient fans, even as Lloyd continues to gain market share, establishing itself among top three players. It is expected to continue its growth trajectory as management remain focused. Lloyd’s margins are likely to remain muted over the next couple of years as the management continues to focus on RAC market share gains and ramp-up in other categories. Overall management indicated that demand has been sluggish but its gradually picking up. It expects second half of FY24E to better across segments with better consumer demand including rural. Further, it plans to foray into contract manufacturing of overseas brands and is working towards it to add to the overall revenues. We believe the margin has hit a trough and will continue to improve from here on, given (1) softening commodity inflation; (2) an increase in the premium mix and lowering losses in Lloyd. We maintain BUY with a TP of Rs 1545.

Result Snapshot Q1FY24:

Havells revenue at Rs 48.2b (+14% YoY) stood marginally above estimate supported by better-than-expected performance in Lloyds (+20% YoY) and cables and wires (+24% YoY), while, switchgears (+5% YoY), ECD (+5% YoY) & Lighting (-1% YoY) performance was marginally lower. Softening commodity prices although not fully reflected resulting in Gross margins of 30.4% (+140bps YoY).

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