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Weak demand leads to mellow showing

Revenue rises 7% YoY, driven by the cable segment   

Havells India (HAVL IN) Q3FY24 revenue rose 6% YoY at a three-year CAGR of 12% to INR 44bn, 5% lower than our estimates, led by steady volume growth in cable and wires. B2B performed better on rising infra spend and upcycle in construction activities while B2C demand remains subdued, due to lower rural spending.

Q3 revenue up for cables and Lloyd; ECD & lighting remain muted

In Q3FY24, revenue from cables & wires rose 11% YoY to INR 15.7bn, led by robust volume growth in cables (Polycab C&W volume up 17% YoY and KEI up 14% YoY in Q3), which, in turn, was led by infra capex and pickup in private capex. Fans underperformed due to the impact of change in energy norms and high base. Lighting revenue grew 2% YoY to INR 4.3bn, due to lower LED prices (decline halted from November) while switchgears revenue was up 1% YoY to INR 5.2bn, given the drop in exports and the telecom segment. Lloyd grew 7% YoY while other revenue rose 16% to INR 2.7bn in Q3FY24.   

EBIT margin down 30bp YoY to 9.1%, losses from Lloyd grow

Q3 EBIT margin showed a negative trend, dipping 30bp YoY to 9.1%, owing to disproportionate ad spend in the quarter. EBIT margin from switchgears fell by 60bp YoY to 24.1%, due to the decline in telecom OEM orders while cables margin fell 110bp YoY to 10.4%. ECD margin shrank 190bp to 11.2%, and Others margin contracted 150bp to 1.6%. Lighting margin was the only positive, up 150bp to 14.2%. Lloyd continues to post operating losses, with margin dipping 30bp YoY to
-10.1% based on lower-than-expected sales.

Valuation: reiterate Accumulate with a lower TP of INR 1,385

We lower our EPS by 9% in FY24E and by 4% in FY25E, due to prolonged weakness in consumer demand and margin compression in FY24E. We lower our TP by 6% to INR 1,385 based on 42x (from 45x) December 2025E P/E. We reiterate Accumulate as capacity expansion should aid B2B revenue growth in H2FY25 and FY26. The positive shift in consumer sentiments and turnaround in Lloyd may further aid in the price movement. We expect an earnings CAGR of 27% during FY23-26E, with an average ROE of 21% and ROCE of 20%.  

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