Havells India - Q1FY21 First Cut - ICICI Securities

(CMP: Rs. 594; MCap: Rs. 37160 crore)

Havells India's Q1FY21 performance was better than our estimates in all fronts mainly due to lower than expected decline in revenue of industrial products. The industrial products revenue declined by 42% vs our expectation of 60% decline. On the profitability front, sharp decline in employee cost and other expenses also cushioned EBITDA margin from any sharp fall.

Q1FY21 Earnings Summary

- Havells revenue came in at Rs. 1479 crore down by ~46% YoY (better than our expectation of fall of 52% YoY to ~Rs. 1290 crore) mainly due to lockdown. The industrial products such as wire & cable and switchgear segment reported fall in revenue by 41% and 44% respectively to Rs. 461 crore and Rs. 190 crore respectively (Vs I-direct estimate: Rs. 316 crore and Rs. 157 crore respectively). Revenue from ECD segment declined by 46% YoY to Rs. 302 crore, while lighting business revenue declined by 45% to Rs. 138 crore respectively. Revenue from the Lloyd business declined by 53% YoY due to lockdown in April'20 known to be a peak season for air conditioner sales

- Month of May registered 60% business recovery as compared to same period last years, while business in the month of June'20 was almost recovered as compared to June'19. Overall, the business recovery in Q1FY21 was almost 55% of same period last years

- The gross margin declined by ~270 bps YoY mainly due to change in mix and delay in passing on prices. However, fall in gross margin was partially negated by saving in advertisement and promotional cost (down by 96%% YoY) and employee cost (down by 27% YoY). As a result, EBITDA margin came in at 8.8% during Q1FY21 down by ~140 bps YoY (Vs I-direct estimate: 4%)

- PBT of the company declined by ~68% YoY at Rs. 86 crore (Vs I-direct estimate of Rs. 26 crore) largely on account of lower sales, decline in other income (by 19% YoY) higher depreciation charges (up by 29% YoY) and 4x jump in interest cost during Q1FY21. As a result, PAT were down by 64% at Rs. 63 crore though better than our estimate of Rs. 19 crore

We believe Havell's performance during the quarter was better than our estimate mainly due to strong recovery in the sales during the month of June'20. Also the company has taken major cost rationalisation initiatives to restrict any sharp fall in operating profits. We await management commentary on sustainability of the recovery in the Industrial business and outlook of consumer business going forward. The detailed update will be released post the conference call.

Shares of HAVELLS INDIA LTD. was last trading in BSE at Rs.576.25 as compared to the previous close of Rs. 595.2. The total number of shares traded during the day was 336496 in over 5681 trades.

The stock hit an intraday high of Rs. 597.9 and intraday low of 571.05. The net turnover during the day was Rs. 194493267.

Source : Equity Bulls

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