Despite a blustering summer, cooling demand for Havells India's room air conditioners has sent the consumer durables player's shares lower in trade on April 23.
Havells India posted a 16 percent year-on-year (YoY) rise profit at Rs 518 crore for the forth quarter of the previous financial year, compared to Rs 446 crore in the year-ago period. The revenue for March quarter rose 20 percent to Rs 6,543 crore, as against Rs 5,442 crore reported in the same quarter of 2024.
Even though the firm reported a strong earnings beat for the quarter ended March FY2025, the cautious management commentary on lower urban demand for cooling products due to the late onset of summer, especially in South India, sparked a sell-off.
The primary sales of RACs remained robust in Q4, while secondary sales slowed down in March and April, which may impact primary sales in Q1. The impact of inflationary pressures on the real estate market needs to be monitored.
At 1.50 pm, shares of Havells India were lower by 3 percent on the NSE, quoting Rs 1,615.6 apiece.
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Revenue growth was supported by strong growth in Lloyd and cable segments, even as certain categories such as switchgear and lighting witnessed muted performance. The firm's EBITDA margin stood at 11.6 percent compared to 11.7 percent on-year, driven by a balanced product mix, improved scale, and control on A&P spends.
JM Financial maintained its bullish outlook on Havells shared "based on its strong brand, distribution, in-house manufacturing, fresh investments in team + brand + distribution, opening up of export opportunity, market share gain, strong balance sheet and improved ratios." The brokerage has a target price of Rs 1,900 per share.
Kotak Institutional Equities said the secondary demand for the room air conditioner industry waned in March/April due to a mild start to summer (particularly in the South), which could weigh on primary sales in 1Q (subject to how the season pans out in the North). As a result, the brokerage kept its 'sell' rating, with a price target of Rs 1,400 apiece.
Motilal Oswal noted that the management highlighted that the large appliances and cables fueled revenue growth. The ramp-up of new capacity in the C&W segment is underway.
"We believe the demand pickup in the summer season and the sustainability of Lloyd's margin will be key monitorables in the near term. Wires demand too, has been hit by the slow real estate demand. This has also hurt the margin of wires, and recovery needs to be monitored," said the brokerage, keeping its 'neutral' call intact, with a price target of Rs 1,710.
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