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    Havells India

    HAVELLS
    Consumer Durables·21 Jul 2025
    Management Summary

    Havells India experienced a challenging Q1 FY26 due to weak summer demand impacting cooling products and ECDs, leading to high inventory levels for Lloyd. However, the Cables & Wires segment delivered robust growth, supported by infrastructure demand and significant CAPEX. The company also made a strategic investment in Goldi Solar to boost its renewable energy presence. Management views Q1 challenges as transitory and expects revenue and margin improvements in upcoming quarters, driven by operational efficiencies and continued investment in high-growth areas like cables and solar.

    Highlights

    5
    • Cables & Wires segment demonstrated robust growth, driven by infrastructure and industrial demand, with volume growth of 20-21% and value growth of 27%.

    • Havells committed an additional CAPEX of over ₹340 crores for further capacity building in the Cables & Wires segment, with plans to double capacity from FY24 to FY27.

    • The company invested ₹600 crores in Goldi Solar, targeting to expand its solar portfolio from ₹500 crores last year to ₹1,000-1,500 crores in the next couple of years.

    • Gross margin improved by 160 basis points year-on-year, reflecting a focus on cost discipline and operational efficiency.

    • Rural markets showed faster growth than urban areas, with Havells expanding its product range and distribution, contributing 5-6% of overall consumer product revenues.

    Concerns

    3
    • Q1 was a challenging quarter with unexpected weak summer and prolonged subdued consumer demand, leading to a decline in cooling products revenue.

    • High inventory levels were noted for Lloyd (ACs) at Havells' end, though management expects it to readjust in the coming quarters.

    • The ECD (Electrical Consumer Durables) segment, particularly fans and room coolers, saw a significant decline in sales due to seasonal effects and intermittent rains.

    Segment breakdown

    Cables & Wires
    20.5% Volume Growth27% Value Growth16% Contribution Margin
    Solar Business
    ₹500 Cr Revenue (Last Year)
    Rural Consumer Products
    5% Share of Revenue
    Switchgears
    38% Contribution Margin Target
    Gross Margin
    160 bps Improvement
    List

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    M&A

    Goldi Solar

    acquisition · closed · Consideration ₹NaN (cash)

    Guidance & targets

    5
    CategoryTargetPriority
    Solar Business
    Revenue
    ₹1,000-1,500 crores
    Medium
    Cables & Wires
    Contribution Margin
    14-15%
    High
    Cables & Wires
    Capacity
    doubling
    High
    Switchgears
    Contribution Margin
    38-40%
    High
    Overall Business
    Revenue Growth and Margin Improvements
    drive revenue growth and margin improvements
    Medium

    Lloyd inventory readjustment

    next couple of quarters
    CurrentHigh inventory levels at Havells' end
    TargetNormalized inventory levels

    Why it matters

    High inventory can lead to discounting and margin pressure; its readjustment is key for profitability.

    But we are very confident that in the next couple of quarters all this will get readjusted fully.

    How to verify

    key_financials.segment_breakdown[name='Lloyd'].metrics[label='Inventory Levels']

    Risks & concerns

    4
    RiskSeverity

    Weak summer and subdued consumer demand

    Q1 was a challenging quarter with unexpected weak summer and prolonged subdued consumer demand, leading to a decline in cooling products revenue.Management acknowledged

    medium

    High inventory levels for Lloyd (ACs)

    Lloyd inventory is at a high level due to full capacity production and weak demand, but management is confident it will readjust in the next couple of quarters.Management acknowledged

    medium

    Decline in ECD segment (fans, room coolers)

    The ECD segment, particularly room coolers and fans, saw a significant decline due to intermittent rains and structural seasonal demand destruction.Management acknowledged

    medium

    Competitive discounts in the Lloyd market

    Management stated Havells does not take short-term decisions like heavy discounting and focuses on internal efficiencies and better price positioning.Analyst downplayed

    low

    Q&A highlights

    6

    “No. I think, if you see Lloyd inventory is definitely at a high level, because you know very well that we have production facilities which continue to run at full capacities from October. We build up inventories till March. And so there was a decent amount of inventory at the end of March as well, which obviously could not be brought down to normalized levels of very low inventories at the end of June. And because we have two manufacturing facilities, plants have to keep running. So, I think, if we really see from a season point of view, then it's not a very large inventory, but we are now coming into the upcoming low season for AC sales. But we are very confident that in the next couple of quarters all this will get readjusted fully.”

    Addresses concerns about high inventory for a key product segment (Lloyd ACs) and management's confidence in its resolution without significant price discounting.

    asked by Natasha Jain

    3 min read6 chapters

    Detailed Narrative

    01

    Overall Q1 Performance and Outlook

    Havells India faced a challenging Q1 FY26 marked by an unexpected weak summer and subdued consumer demand. This led to a significant decline in revenue from cooling products, particularly ACs, fans, and room coolers, which had a strong base last year. Despite these headwinds, management views these challenges as transitory📎 and anticipates a rebound in revenue growth and margin improvements in the coming quarters. The company's focus on cost discipline resulted in modest growth in expenses, contributing to better operational efficiency.

    02

    Robust Growth in Cables & Wires Segment

    The Cables & Wires segment was a strong performer, driven by robust demand from infrastructure and industrial sectors. The segment reported a volume growth of 20-21% and a value growth of 27%. Havells has accelerated its capacity building investments in this segment, committing an additional CAPEX of over ₹340 crores. The company plans to double its underground cable capacities between FY24 and FY27, with a particular focus on medium and high voltage cables, where major buildup is occurring.

    03

    Lloyd and Cooling Products Challenges

    The Lloyd brand, particularly ACs, experienced high inventory levels at Havells' end due to continued full-capacity production and weak seasonal demand. However, management expressed confidence that these inventories would readjust fully within the next couple of quarters. While the market remains competitive, Lloyd is focused on margin improvement through internal efficiencies and better price positioning. The ECD segment, including fans and room coolers, also saw a significant decline, attributed to intermittent rains and a structural destruction of seasonal demand for room coolers.

    04

    Strategic Investment in Renewable Energy

    Havells made a strategic investment of ₹600 crores in Goldi Solar during the quarter to accelerate its growth in the renewable sector. This investment aims to leverage Goldi Solar's module manufacturing capabilities and expand Havells' solar portfolio, which was ₹500 crores last year, to an ambitious target of ₹1,000-1,500 crores in the next couple of years. The company views renewables as a significant future growth opportunity, aligning with the 'make-in-India' initiative and building a long-term structural presence in the sector, including backward integration into solar cells and potential future ventures like battery storage.

    05

    Rural Market Expansion and Product Strategy

    Havells continues to see faster growth in rural markets compared to urban areas, although rural sales currently constitute a small portion (5-6%) of overall consumer product revenues. The company is expanding its product range and distribution in these markets, including Havells-branded products and soon, Lloyd products. Initiatives include opening fully branded 'Utsav' stores in smaller towns and adding product categories to existing channels, indicating a calibrated strategy for sustainable growth rather than just market dumping.

    06

    Margin Management and Operational Efficiency

    Despite the challenging quarter, Havells achieved a 160 basis points improvement in gross margin year-on-year, reflecting its focus on cost discipline and operational efficiency. While ECD margins were impacted by product mix and lower summer sales, individual categories within ECD (fans, water heaters, coolers, SDA) showed improvement. The company aims to maintain contribution margins of 14-15% for Cables & Wires and 38-40% for Switchgears, emphasizing premiumization and internal efficiencies across its businesses.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.