See Q2 demand momentum continuing in Q3: Havells

Brokerage firm BofA-ML raised Havells India's target price to Rs 710 due to which the stock went up more than 2 percent in the morning trade. According to the brokerage, the company is likely to post better Q2 numbers after a long lull.  

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Speaking to CNBC-TV18, Anil Gupta, joint MD, Havells India believes the demand growth for the company has improved. He believes despite macro challenges, the company's initiatives are helping it come back to the growth levels that they had expected in the beginning of the year. "We are expecting a good quarter in the Q2 and are expecting it to continue in Q3 as well because of the good monsoons," he adds.

Below is the verbatim transcript of Anil Gupta’s interview on CNBC-TV18

Q: What kind of demand are you seeing specifically in the consumer segment? Has there been any improvement in the last couple of months or so?

A: There is no doubt that there are challenges in macroeconomic scenario. The overall building segment has not grown to the same extent which it has been in the past couple of years. We saw that in the first quarter as well, but we were a tad disappointed with our performance mainly because we did mention at that time that there were a few factors overstocking in the fourth quarter, the availability of raw material was not at its best.

We had some shortages of copper. So, we were not able to see the kind of growth that the company would have envisaged given the initiatives that we are taking on brand building, distribution expansion and product expansion.

We are seeing that coming back in the second quarter. I am not seeing a whole lot of change in macroeconomic situation but the company’s initiatives are helping it come back to the growth levels that we had expected in the beginning of the year.

Q: The question’s reference was more to the demand side in the light of the good monsoon; people are talking about an expected boost in demand from rural areas. Are you witnessing anything by way of improvement there?

A: There is definitely improvement in the second quarter. The growth as expected in the beginning of the year is coming back. We are expecting a good quarter in the second quarter and we are expecting it to continue in the third quarter as well because of the good monsoons.

We are expecting this middle part of the year to be a good year as we have seen in the past couple of years, definitely the first quarter was a bit of a disappointment but we are seeing that getting reversed in the second quarter and third quarter.

Q: Urban demand was weak especially in western and central India. Will rural demand boost enough to give you an overall better picture or will it just be a mollifying impact?

A: The mini-metros, the smaller towns are seeing a decent growth and Havells’ expansion is mainly into these areas apart from rural areas. So, it is not just a rural segment but the mini-metros and the smaller towns are also helping growth coming back. There is a slowdown in the major metros, five-six big metros but it is being covered up with the growth in the mini-metros.