Havells India’s Profit Surge Signals Resilience, But Challenges Loom

Havells India Limited has delivered a robust performance in its fiscal fourth quarter (Q4 FY24), reporting a 24.76% year-on-year (Y-o-Y) jump in consolidated net profit to ₹446.7 crore. The surge, driven by strong revenue growth and improved margins, underscores the company’s ability to navigate market volatility. However, recent quarterly trends and sector-specific headwinds suggest caution ahead.

Financial Highlights: A Story of Operational Efficiency

The company’s Q4 FY24 results reflect both top-line and bottom-line momentum. Revenue rose 12.47% Y-o-Y to ₹5,517.77 crore, fueled by demand across key segments. EBITDA expanded 20.4% to ₹635 crore, while margins improved by 81 basis points to 11.66%, signaling better cost management. For the full fiscal year 2024, revenue grew 10.24% to ₹18,838.97 crore, marking Havells’ position as a dominant player in India’s electrical and consumer goods markets.

Segment-Specific Performance: Strengths and Struggles

• Cables and Wires: Grew 14% Y-o-Y in FY24, benefiting from infrastructure projects and rising industrial activity.
• Lloyd Consumer: Revenue hit ₹3,785 crore in FY24, up 12%, as the brand strengthened its hold on the home appliances and lighting markets.
• Switchgear: Showed “decent growth” despite a high base, reflecting sustained demand in commercial and residential sectors.
• Lighting: Volumes increased, but revenue lagged due to persistent price deflation, a recurring challenge in competitive markets.

Dividend and Stock Performance: Mixed Signals

The company’s final dividend of ₹6 per share, combined with an interim ₹3, offers shareholders a total payout of ₹9—a 20% increase over FY23’s ₹7.5. However, the stock’s recent trajectory is uneven. Despite a 5.29% annual gain, it has dipped 2.82% year-to-date (YTD), trading at ₹1,661.55 on April 30, 2024. Investors will watch closely for Q4 FY25 results, which are slated for release in April 2025.

FY25 Outlook: Growth Hurdles

While FY24 results were strong, Q3 FY25 data revealed a 3.5% Y-o-Y decline in net profit to ₹278 crore, despite a 10.8% revenue rise to ₹4,889 crore. This suggests margin pressures or one-off costs, possibly linked to input price volatility or competitive pricing in the lighting segment. The upcoming Q4 FY25 results will test whether Havells can sustain momentum amid these challenges.

Conclusion: A Resilient Player, But Not Immune to Headwinds

Havells India’s FY24 success is undeniably impressive, with net profit growth outpacing revenue expansion—a testament to operational discipline. Its diversified portfolio, strong brand equity in Lloyd Consumer, and infrastructure-linked businesses like cables position it well for long-term growth. Yet, the Q3 FY25 profit dip and sector-specific issues like lighting deflation highlight risks.

Investors should weigh the positives: a dividend yield of ~0.55% (based on current stock price and FY24 payout) and a track record of margin expansion. However, the stock’s muted YTD performance and Q3 FY25 softness suggest caution. The company’s upcoming earnings call on April 22, 2025, will be critical in gauging management’s strategy to address margin pressures and competitive dynamics.

For now, Havells remains a resilient player in a fragmented market—its resilience tested, but its fundamentals intact. The next quarter will determine whether this growth story continues or faces a speed bump.