Havells reports 11% like-to-like sales growth in Q3; 27% growth in PAT

Sales Performance

Havells India, one of India’s best performing companies and an electrical goods maker, reported an 11% like-for-like revenue growth for the third quarter and a sharp increase in profit margins. In the second quarter, the company was able to report only a 4% increase in comparable sales.

The company’s comparison quarter last year had been hit hard by demonetization and a cash crunch.

Including revenue from the recently acquired Lloyd consumer durables brand, total revenue increased 31% on year to Rs 1,966 cr in Q3. In Q2, total revenue had risen 22% at Rs 1,777 cr.

EBITDA or operating profit was up 33% on a like-to-like basis at Rs 254 cr, and up 37% including Lloyd numbers, at Rs 262 cr.

EBITDA margin was just 2.9% at Lloyd, while it improved to 15.2% at Havells from 12.7% in the previous year. In the preceding, second quarter, EBITDA margin was was at 15.8% at Havells and at 7% at Lloyd.

In Q3, Lloyd saw forex-related gains of Rs 11.5 cr, which helped the unit post a pretax income of Rs 15 cr. Added to Rs 254 cr of pretax income at Havell’s, the total pretax income was Rs Rs 269 cr, which was up 30% on year.

Net profit of Rs 194 cr was up 27% on year.

Within the Havells business, the strongest revenue growth was seen in the consumer durables business, which accounts for about a fourth of the total revenue.

It was up 33% on year, followed by lights, which grew 21% and switchgear, up 11%. Cables division had the weakest growth at just 3% net of taxes.

The growth in switchgears was led by switches, the company said.

“Wires has registered 17% value growth. Cables has declined, as orders delayed due to volatility in commodity prices and GST transition, and is expected to pick-up post rates rationalization,” it said.

Lighting continue to grow across consumer and professional business with impressive growth in B2B segment, it added.

Among durables, it said fans, appliances and water heaters have well performed with “market leading” growth.

“We have retained market leadership in premium fan segment which contributes 2/3 rd of ceiling fans with the highest average price realization in industry,” it said.

Besides, there was 16% growth in Lloyd business to Rs 293 cr.

Gross profit, after deducting depreciation charges, was at 26% during the quarter, compared to 24.9% in the year-ago period and excluding Lloyd numbers.

Lloyd had gross margin of 16.9%, taking the overall margin to 24.6%.

The highest margins were seen in the switchgears business at 40%, followed by durables at nearly 30% and lighting at 28.5%. Cable margins were at 17.1% compared to 14.3% last year.

“Margins in cable segment enhanced due to better realization in cables and product mix shift towards domestic cables,” it said.

Margin performance

Domestic cables constitutes 51% in Q3 FY18 against 45% in Q3 FY17.

Margins in durables category improved sequentially due to higher capacity utilization at factory level for water heaters, the company said.

“On year-on-year basis, the uptick is also attributed to lower realization in Q3 FY17 owing to demonetization influenced incentive schemes,” it said.

Lloyd margins, at 16.4%, were impacted due to transition towards new energy efficiency norms, it said.