Havells reported 3QFY18 result broadly in line with expectations. Havells’ base revenue was up 14% y-o-y (adjusted for GST impact) led by Consumer Durables (+33%, especially Water Heaters), Lighting (+21%) and switch gears (+11% y-o-y, led by switches), though partially offset by weak cable and wires (+3% y-o-y, high GST rate led to delayed orders by govt). Lloyd registered 16% revenue growth and has prepared for its first summer season sales post acquisition. EBITDA margins continue to improve on a) higher facility utilisation (water heaters), b) change in product mix (higher wires and switches sale) and c) increased ability to pass on raw material price increases post-demonetisation phase. While management continue to remain cautious on revival in construction segment (residential housing), it sounded optimistic about uptick in infrastructure capex. We continue to like Havells on its great execution track record; product portfolio, brand, distribution reach & dealer connect, but await better price opportunity for entry/add. Maintain ‘HOLD’.
Havells (ex-Lloyd) reported 3QFY18 revenue at R1.67 crore, led by ECD (+33% on adjusted basis; water heaters, fans and appliances all grew at strong pace), lighting and stabilisation in switchgears (after few quarters of negative growth). However, underground cables and housing wires reported sluggish volume growth (low single digit decline and flat volumes y-o-y, respectively) due to delay in government orders on higher GST rate of 28% (now reduced back to 18%; expect growth to come back) and subdued construction segment demand. Lloyd revenue grew 16% y-o-y in 3Q and company has prepared itself for first summer season sales post acquisition and change in energy norms.
