Havells India Ltd , a leading electrical equipment manufacturer, has announced a strategic investment of ₹600 crore in the solar sector, even as it faces headwinds in consumer demand. The company's first-quarter results reveal a mixed performance across its diverse product segments.

Strategic Solar Investment

Havells has invested ₹600 crore in Goldi Solar Private Limited, acquiring a 9.09% stake through equity and Compulsorily Convertible Preference Shares (CCPS). This move is aimed at accelerating growth in the renewable energy sector. Goldi Solar is primarily engaged in the manufacturing and supply of solar modules and inverters, complementing Havells' existing presence in the solar ecosystem through its offerings of modules, inverters, solar cables, and DC switchgears.

Q1 Financial Performance

The company reported a consolidated revenue from operations of ₹5,455.35 crore for Q1, marking a 6.2% decrease compared to ₹5,806.21 crore in the same quarter last year. The profit after tax stood at ₹347.53 crore, down from ₹407.51 crore in the corresponding quarter, representing a 14.7% decline.

Segment-wise Performance

• The Cables segment showed robust growth, supported by capacity expansion and strong industrial-infrastructure demand.
• Lloyd Consumer products experienced a significant decline due to a weak summer season, contrasting with the strong performance in the previous year.
• Electrical Consumer Durables saw reduced demand for fans and air coolers, attributed to unseasonal rains and a shorter summer season.
• Switchgears maintained positive growth momentum.
• Lighting & Fixtures segment faced challenges, with LED prices showing approximately 10% year-on-year deflation.

Operational Highlights

• The company's focus on cost discipline helped contain the impact of revenue decline on net profitability.
• Contribution margins were affected by under-absorption of manufacturing expenses due to lower production volumes.
• Inventory levels increased, primarily due to lower-than-planned sales in the Lloyd segment.

Long-term Strategy

Havells is implementing long-term growth strategies, including:

1. Expanding its industrial demand base
2. Investing in the solar business to capitalize on renewable energy opportunities
3. Improving operational efficiency to navigate short-term weaknesses in consumer demand

Management Commentary

While specific management quotes are not available, the company's actions suggest a focus on diversification and long-term growth, particularly in the renewable energy sector, to offset short-term challenges in consumer-oriented segments.

Havells India continues to adapt its strategy in response to market conditions, balancing its portfolio between consumer durables and industrial products while making significant inroads into the promising solar energy market.

Havells , a leading electrical equipment manufacturer, has reported a decline in its financial performance for the first quarter of the fiscal year. The company's standalone net profit dropped 14% to Rs 352.00 crore, down from Rs 409.00 crore in the same period last year, reflecting challenging market conditions and an unexpectedly weak summer.

Revenue and Profitability

The company's net sales decreased by 6% to Rs 5,438.00 crore, compared to Rs 5,783.00 crore in the corresponding quarter of the previous year. This decline in revenue was primarily attributed to weak sales of air-conditioners, fans, and air-coolers due to the unexpectedly mild summer.

Segment Performance

The company's performance varied across different segments:

The cables segment showed strong growth with a 27% increase, while the Lloyd Consumer and Electrical Consumer Durables segments faced significant declines of 34% and 14% respectively.

Management Commentary

Anil Rai Gupta, Chairman of Havells, commented on the results, stating that the high channel inventory for air conditioners will take 1-2 quarters to liquidate, with production being adjusted accordingly. He expects the challenges to be transitory, with revenue growth and margin improvements anticipated in the coming quarters.

Outlook

Despite the challenging quarter, Havells remains optimistic about future performance. The company expects the current challenges to be temporary and is looking forward to improvements in revenue growth and margins in the upcoming quarters.

Investors and analysts will be closely watching Havells' performance in the coming quarters for signs of recovery, particularly in the consumer durables and Lloyd segments.

Note: All financial figures are based on the standalone results for the quarter ended June 30, as reported by Havells Limited.