Havells Shares Fall 6% After Q4 Results Despite Profit Growth

Mumbai, April 23: Shares of Havells India fell as much as 6% on Thursday after the company’s March quarter earnings disappointed investors, with weak operating performance and subdued revenue growth overshadowing a sharp rise in profit. 

At the time of writing, the stock was down six percent at Rs 1,265.  

The stock declined as market participants reacted to the quality of earnings, even though headline net profit came in ahead of expectations. Analysts flagged that the earnings beat was largely driven by non-operational factors, while core performance remained under pressure. 

Other Income 

For the fourth quarter, Havells reported a strong year-on-year jump in net profit, supported in part by higher other income. However, revenue growth remained muted at low single digits, missing Street expectations and indicating a slowdown in demand momentum. More importantly, operating metrics painted a weaker picture EBITDA declined on a yearly basis, while margins contracted, reflecting cost pressures and an unfavourable product mix. 

The consumer durables segment emerged as a key drag during the quarter. A slower start to the summer season impacted demand for cooling products such as fans and air-conditioners, which are typically strong contributors in this period. The Lloyd business, which houses the company’s air-conditioning portfolio, saw a noticeable decline, raising concerns about near-term demand visibility in discretionary categories. 

Cables, Wires 

In contrast, segments such as cables and wires continued to deliver steady growth, supported by infrastructure demand and ongoing electrification trends. Switchgears also posted stable performance, although these were not enough to offset the weakness in consumer-facing businesses. 

Brokerages turned cautious following the results, with several firms cutting target prices and, in some cases, downgrading the stock. Analysts highlighted that premium valuations leave little room for disappointment, and the latest earnings have raised questions about the pace of recovery in both demand and margins. 

Elevated Expectations 

The sharp correction in the stock also reflects elevated expectations going into the results. Havells has been a consistent compounder over the years, commanding higher valuation multiples compared to peers. However, the current environment of uneven demand and rising input costs is testing those assumptions, particularly in the near term. 

Looking ahead, management commentary around demand recovery, especially in the summer-driven categories, will be closely watched. A pick-up in consumption trends, along with margin stabilisation, will be critical for the stock to regain momentum. 

While the company’s long-term growth drivers  including rising electrification, housing demand and premiumisation  remain intact, the latest results suggest that near-term challenges persist. 

Overall, the 6% fall in the stock underscores investor disappointment with the underlying performance, shifting the focus from headline profit growth to the sustainability of earnings and demand outlook in the quarters ahead. 

Source: 

• https://www.nseindia.com/get-quote/equity/HAVELLS/Havells-India-Limited
• NSE