Havells India reported a 19.7% year-on-year revenue increase for the first quarter, led by strong performance in its cables and consumer durables segments. Despite this growth, profit margins tightened due to higher raw material costs and increased spending on advertising. Investors are now tracking whether price adjustments and lower marketing costs can help the company recover its profitability in the coming quarters.
Havells India, a major name in the Indian consumer electricals sector, showed significant top-line expansion in its first-quarter results. The company achieved a 19.7% year-on-year revenue growth, supported by steady demand across multiple product categories. The cables and wire division was a primary driver of this growth, delivering a 27% increase compared to the same period last year. The consumer durables business, which includes the company's Lloyd brand, also contributed positively with a 15% revenue rise, while electrical consumer durables grew by 12%. The lighting segment experienced a more modest growth of 4%.
Margin Contraction and Operational Challenges
While the company saw strong sales, its profitability came under pressure. Gross margins narrowed by 218 basis points, falling to 31.3%, while operating margins dropped by 228 basis points to 7.3%. This decline in profit margins was largely driven by two factors: higher raw material costs and a deliberate increase in spending on brand advertising. The company's switchgear segment faced a 3% decline in revenue, which was partially linked to a 15% drop in exports, with the management citing geopolitical disruptions in West Asia as a factor affecting international sales. For the cables and wire business, while sales volume increased, volatility in the prices of raw materials created challenges for procurement and operational order activity.
Lloyd Segment and Future Outlook
Investors are closely watching the Lloyd consumer durables segment, which reported a negative EBIT margin during the quarter despite its healthy revenue growth. Because this business unit has traditionally required significant investment, its path to reaching break-even profitability remains a key area for monitoring. Brokerage firms, including Anand Rathi and JM Financial, have noted these profitability hurdles while updating their financial estimates. The management of Havells has indicated that they expect margins to improve in subsequent quarters, relying on recent adjustments to product pricing and the expected normalization of advertising expenditures.
Moving forward, the primary factors for investors to track include the sustainability of demand in the cable and wire segment, the timing of the Lloyd business reaching profitable levels, and the company's ability to manage raw material price volatility. Any updates on stabilizing export markets in West Asia will also be a relevant point to monitor regarding the switchgear business performance.