Commodity Price Surge Threatens Demand
Havells India's Chairman and Managing Director, Anil Rai Gupta, has sounded a warning regarding the escalating prices of key commodities like copper and silver. This surge presents a near-term challenge for consumer demand and could squeeze company margins, he stated during an interaction following the company's December quarter results.
Copper and Silver Price Hikes
Gupta highlighted a significant 25% spike in copper prices within the past month alone. The rising cost of silver is also impacting the company's switchgear business margins. This inflationary pressure is forcing companies across the market to strategize on how to absorb or transfer these increased expenses to buyers.
Navigating Short-Term Volatility
The company anticipates a temporary dip in demand as channel partners normalize inventory levels built up in the third quarter. While brand and distribution-oriented businesses generally exhibit less price elasticity, prolonged hyperinflationary conditions could eventually affect overall demand. Havells India plans to pass on cost increases to consumers to protect its margins in the medium term.
Market Reaction
The warning contributed to a slip in Havells India shares, which traded lower by 3.6% at ₹1,394.5. The stock has experienced a 13% decline over the past year, reflecting broader market concerns and company-specific factors.