PL First Cut – Havells Q2FY24
PL First Cut – Havells Q2FY24 – Praveen Sahay – Research Analyst, Prabhudas Lilladher Pvt Ltd
Havells Q2FY24 First Cut: Missed estimates across segments
(CMP: Rs1363 | MCap: Rs854bn | Accumulate)
➡️ Revenues grew by 6%YoY to Rs39.0bn (PLe: Rs41.9bn, 7% below), 6% below cons. estimate.
➡️ Gross margins expanded by 240bps YoY to 33.3%. (PLe: 31%, cons. est. 31.3%)
➡️ EBITDA grew by 30.2% YoY to Rs3.7bn (PLe: Rs3.8bn, 2.2% below), 9.0% below cons. estimates. EBITDA margins expanded by 180bps YoY to 9.6%. (PLe: 9.1%) vs 9.9% cons. estimates. Emp. expenses increased by 22.6% YoY, resulted lower EBITDA margin expansion against Gross margin.
➡️ PBT grew by 33.2% YoY to Rs3.4bn (PLe: Rs3.5bn, 3.3% below).
➡️ Adjusted PAT grew by 33.2% YoY to Rs2.5bn (PLe: Rs2.6bn, 4.1% below), 14.8% below cons. estimates.
➡️ Switchgears revenues grew by 9.4% YoY to Rs5.3bn driven by infrastructure & construction. EBIT grew by 15.5% YoY to Rs1.4bn, with margin expanded by 140bps YoY to 26.4%.
➡️Cables revenues grew by 8% YoY to Rs14.7bn. (vs Polycab dom. C&W rev. up 35.5% YoY). EBIT grew by 98.7% YoY to Rs1.7bn, EBIT margin expanded by 530bps YoY to 11.6%. Cable margins reverted to its normative level post commodity price led disruption in Q2FY23.
➡️ Lighting revenues flat YoY at Rs4.0bn, YoY price deflation in LED continues to impact consumer lighting revenues; volume growth sustained. EBIT decline by 1% YoY to Rs570mn, with margin flat YoY to 14.3%.
➡️ ECD revenues decline by 5.2% YoY to Rs7.3bn due to muted consumer demand & shift in festival demand from Q2 to Q3. EBIT decline by 5.8% YoY to Rs 848mn, EBIT margins flat YoY to 11.6%.
➡️ Lloyd revenues grew by 18.5% YoY to Rs4.97bn, despite weak season while with the start of south plant, Lloyd grew decently in Q2FY24. EBIT loss stood at Rs745mn due to competitive pricing in sector.
➡️ Others revenues grew by 12.2% YoY to Rs2.7bn. EBIT decline by 1.7% YoY to Rs40mn, EBIT margins contracted by 20bps YoY to 1.5%.
The net working capital days stand at 39days up from 36days in Q1FY24 & flat YoY.
The stock currently trades at 49x/38x FY25E/FY26E earnings.