Havells India's results defeat investor expectations

Havells India (Havells) one of India's leading electronic equipment manufacturer announced its quarterly results on Wednesday. The company showed average growth in net revenue with slow growth in EBITDA and net profit.

On financial front, the net revenue from operations of Havells reached Rs 1344 crores in Q3FY16 compared to Rs 1247 crores in Q3FY15, an increase of 7.78 per cent year on year (YoY). The EBITDA stands at Rs 183 crores this quarter compared to Rs 180 crores in Q3FY15, an increase of 1.56 per cent YoY. The EBITDA margin of company stands at 13.62 per cent this quarter compared to 14.45 per cent in Q3FY15. The slow increase in EBITDA is attributed to substantial increase in other expenses and purchase of goods by company. Other expenses reached Rs 287 crores, an increase of 22.77 per cent YoY; and purchased goods expenses increased by 25.63 per cent to Rs 121 crores YoY. The net profit stood at Rs 121 crores in Q3FY16 compared to Rs 116 crores in Q3FY15, an increase of 3.92 per cent YoY. 

The nine month ending consolidated net revenue from operations decreased by 1.85 per cent and reached Rs 3961 crores compared to Rs 3889 crores for the same period last year. The net profit for nine month period stood at Rs 349 crores compared to Rs 343 crores, an increase of 1.74 per cent for the same period last year.

During the quarter, the process of 80% stake sale for Sylvania was completed and the consideration has been received. The equity value of 100% stake is Euro 186 million (around Rs 1357 crores), which is more than the cumulative investment of Rs 981 crores. The disinvestment will release capital; and reduce uncertainty and earnings volatility for consolidated financials. Going forward, the sale will bring in improvement in capital return ratios. The stock of company is trading at Rs 300.15, a decrease of 0.56 per cent from previous close. 

Havells is an electrical and power distribution equipment manufacturer. The Company has four business segments: switchgears; lighting and fixtures; cables; and electrical consumer durables. The Company along with its subsidiary companies owns some of the brands, such as Crabtree, Sylvania, Concord, Luminance, Linotile and Standard.