Havells India: Tough road ahead

Shares of Havells India ell over 3% in morning trade on July 28, a day after the company reported a 64% fall in June quarter net profit.
The company’s consolidated net profit came at Rs 63.98 crore for the June quarter of FY21, down 63.87% from Rs 177.09 crore in the corresponding quarter of the previous financial year.
Net sales came at Rs 1,483.40 crore in the June quarter, down 45.4% from Rs 2,716.88 crore year-on-year (YoY).
The fall in the electrical equipment maker’s revenues reflect the damage owing to the pandemic.
EBITDA stood at Rs 163.76 crore, down 48.63% from Rs 318.81 crore in Q1FY20.
Havells India EPS has decreased to Rs 1.02 in Q1FY21 from Rs 2.83 in Q1FY20.

There are some bright spots. Although, the revenues of all segments: switchgears, cable, lightning & fixtures, electrical consumer durables, Lloyd consumer and ‘others’ have declined for the quarter. However, on an overall basis, there was an improvement by June. The revenue growth has improved in the month of June to 4%. This is after registering a 40% revenue decline in May.

While the company has sailed through a challenging quarter effectively, there are hurdles on the road ahead. According to Havells, “Owing to frequent regional disruption and shutdowns, demand scenario remains hazy and uncertain.”
Investors will have to watch for meaningful sustainable indications of demand improvement.

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