PL First Cut – Havells Q1FY24 – Decent growth in Llyod sales with flat Lighting segment

PL First Cut – Havells Q1FY24 – Praveen Sahay – Research Analyst, Prabhudas Lilladher Pvt Ltd

Havells Q1FY24 First Cut: Decent growth in Llyod sales with flat Lighting segment

(CMP: Rs1356 | MCap: Rs850bn | BUY)

➡️ Revenues grew by 13.9%YoY to Rs48.3bn (PLe: Rs45bn, 6.5% above), 2.9% above cons. estimate.

➡️ Gross margins expanded by 170bps YoY to 30.4%. (PLe: 30.9%, cons. est. 31.9%)

➡️ EBITDA grew by 15.8% YoY to Rs4bn (PLe: Rs4.9bn, 18.7% below), 15.2% below cons. estimates. Margins remained flat expanding by 10bps YoY to 8.3%. (PLe: 11.1%) vs 10.1% cons. estimates.

➡️ PBT grew by 22.1% YoY to Rs3.8bn (PLe: Rs4.6bn, 15.9% below).

➡️ Adjusted PAT grew by 25.4% YoY to Rs2.9bn (PLe: Rs3.4bn, 15.6% below), 15.5% below cons. estimates.

➡️ Switchgears revenues grew by 4.6% YoY to Rs5.4bn with normalization in channel inventory. EBIT grew by 10.7% YoY to Rs1.5bn, with margin expanded by 150bps YoY to 27.7%.

➡️ Cables revenues grew by 24.5% YoY to Rs14.9bn. (vs Polycab C&W rev. up by 46.9% YoY). EBIT grew by 93.2% YoY to Rs1.7bn, EBIT margin expanded by 410bps YoY to 11.4%.

❌Lighting revenues remained flat at Rs3.7bn. EBIT de-grew by 13.3% YoY to Rs532mn, with margin contracted by 210bps YoY to 14.3%. Deflationary trend in LED impacted the consumer lighting revenues, whereas good growth was seen in professional lighting. Lighting margins impacted owing to low value growth and price erosion.

➡️ ECD revenues grew by 4.7% YoY to Rs8.8bn due to poor fan sales owing to unseasonal rains. EBIT decline by 12.9% YoY to Rs957mn, EBIT margins contracted by 220bps YoY to 10.9%.

➡️ Lloyd revenues grew by 21% YoY to Rs13.1bn, despite unfavourable season due to unseasonal rains while with the start of south plant, Lloyd grew decently in Q1FY24. EBIT loss stood at Rs616mn due to competitive pricing in sector.

➡️ Others revenues grew by 9.1% YoY to Rs2.5bn. EBIT decline by 28.2% YoY to Rs88mn, EBIT margins contracted by 190bps YoY to 3.5%.

The net working capital days stand at 36days up from 25days in Q1FY23

The stock currently trades at 55x/45x FY24E/FY25E earnings.