fwd
Havells India reported better than expected 2QFY22 performance.
# Revenue at INR32.2bn, +31% YoY (+20% yr CAGR) and 4% above JMFe. (10% above consensus)
• Cables and Wires up 46% YoY (1% above JMFe; copper prices up 45% YoY and implies negligible volume growth)
• ECD grew 26% YoY (+22% 2yr CAGR; 1% above JMFe) while Lighting and SG shows sharp rise QoQ and surprised positively.
• Lloyd grew 22% YoY (+38% 2yr CAGR) and 1% above JMFe
• Excluding cables and Wires (significant copper price impact) and Lloyd, Havells posted 2yr revenue CAGR of +15%
# Gross margins at 34.3%, -600bps YoY/-140bps QoQ and 170bps below JMFe
# EBITDA at INR 4.44bn, +5% YoY (+37% 2yrCAGR) and 5% above JMFe and 4% above BBRG.
Advt Exp at INR326mn, 72% YoY/-34% QoQ and 47% below JMFe
# EBIT margins: Total EBIT margins at 13.7%, +50bps QoQ and 20bps above JMFe
• Cables and wires margins at 10.1%, -420bps YoY/-560bps QoQ (an element of inventory loss or high cables mix?)
• Margins in other segments showed improvement QoQ. SG margins remained high.
# Adj PAT at INR 3.02bn, +4% YoY and 6% above JMFe (4% above consensus)
• Total Capital Employed stable QoQ
• OCF turned positive on inventory liquidation (1QFY22 had negative OCF)
Key Comments by mgt:
• Health gross across business verticals.
• Price hikes staggered and hence margin impact..
• Maintain positive outlook, which could support margins
• SG growth reflect real estate upcycle # Industrial and Infra expected to remain strong
We have HOLD rating.
