Havells India Ltd shares fell about 6% on Friday, dropping to a new 52-week low of ₹1,002.80 apiece, even as the company reported solid revenue growth in the September quarter (Q2FY27). Rising competition in the cables and wires segment, continued losses in the Lloyd Consumer business and inflationary pressures are key concerns for investors.
Many analysts cut their earnings estimates for FY27 and FY28 after the Q2 results. For instance, Motilal Oswal Financial Services has lowered its Ebitda estimates by about 5% and 8% for FY27 and FY28, respectively, citing continued margin pressure and higher losses in the Lloyd business.
Havells’ consolidated revenue rose 34.6% year-on-year to ₹6,432 crore in Q2FY27. However, Ebitda increased at a relatively slower pace of 30.8% to ₹573 crore, with margin contracting to 8.9% from 9.2% a year ago. Ebitda performance was affected by subdued contribution margins, particularly in cables, offsetting some of the benefit from stronger revenue growth. Ebitda stands for earnings before interest, tax, depreciation and amortization.
Advertising and sales promotion expenses provided some relief, growing just 4.4% to ₹137.6 crore. However, a sharp drop in other income meant pre-tax earnings grew at a slower pace than Ebitda, rising 15.3% to ₹472.6 crore.
Havells’ cables business remains its biggest margin concern. Commodity-linked price increases and a shift in the mix towards larger-sized cables helped the segment’s revenue surge nearly 48% year-on-year to ₹2,999 crore. But Ebit margin contracted by 357 basis points (bps) to 10.15%, hurt by a fall in aluminium prices.