Havells India reported a 35% revenue jump in Q2 FY27 driven by strong cable and wire demand, though profit margins contracted by 0.3% due to rising raw material costs. Investors are closely watching the company’s plan to raise product prices and improve profitability in its Lloyd division.
Segment Performance and Cost Challenges
Havells India posted a robust 35% revenue growth in the second quarter of the 2027 financial year, supported by strong demand across its key segments. However, the company faced margin pressure, with operating margins falling by 30 basis points (0.3%). This decline was largely driven by rising costs for raw materials like copper and aluminum, which hit profitability across the company’s portfolio.
The Cables and Wires division emerged as a major growth driver, recording a 48% increase in revenue compared to the previous year. While the top-line growth was impressive, the profit margin for this specific segment dropped by 3.6%. Management indicated that to protect profitability against volatile commodity prices, the company may need to implement further price hikes of 5% to 7% in the coming quarters.
Lloyd Division and Capital Expansion
The Lloyd consumer electronics unit recorded a 28.5% revenue increase. Despite this growth in sales, profitability remains a hurdle due to seasonal demand patterns and the high cost of raw materials. Because air conditioners make up roughly 75% of the division's revenue, the company is actively working to diversify its product mix into other home appliances to reduce seasonal reliance and stabilize margins.
To drive future growth, Havells has allocated Rs 1,400 crore for capital spending in the 2027 fiscal year. A significant portion of this investment, about Rs 800 crore, is dedicated to expanding cable manufacturing capacity to meet industrial and infrastructure demand. Additionally, Rs 200 crore has been set aside for research and development to maintain its competitiveness against new entrants in the market.
Investor Outlook
Trading at approximately 33 times its expected earnings for the 2028 financial year, the stock is currently evaluated based on its strong brand position and distribution network. For investors, the most critical factors to monitor going forward are the company’s ability to pass on rising input costs to customers without losing sales volume, and the ability of the Lloyd division to contribute more effectively to the bottom line. Success in these areas, alongside the commissioning of new manufacturing capacities, will be key to determining the company’s long-term performance.