Shares of Havells India fell 11 per cent to hit an intraday low of Rs 1,264. 85 on BSE after the company announced its earnings for the quarter ended September 2021.
The company reported a consolidated profit of Rs 302.39 crore for the quarter ended September 2021 compared with a profit of Rs 326.36 crore in the year-ago period. Revenue from operations grew 31.65 per cent to Rs 3,238. 04 crore in the September quarter against Rs 2,459. It was 49 crore a year ago.
The stock opened 3 per cent lower at Rs 1,361 and closed lower. 00 against the previous close of Rs 1,405. 35 on BSE. With a market capitalisation of Rs 81,478 crore, the shares stand lower than 100 day and 200 day moving averages but higher than 5 day, 20 day and 50 day moving averages.
The large-cap stock has gained 83 per cent in the last one year and has risen 42 per cent since the beginning of this year.
Havells India informed that adequate price increase in Lloyd has been challenging due to hyper-competitive environment and margins were further impacted by under absorption of overheads due to lower production.
The company said contribution margins have sustained on QoQ basis though cost pressure remains significantly high and continued volatility in commodity prices impacted cable margins.
Anil Rai Gupta, Chairman and Managing Director of Havells India Limited, said: "We are enthused with healthy revenue growth across business verticals. An increase in commodity cost remains unabated, creating margin headwinds. However, our outlook on demand remains fairly positive. Havells reported healthy revenue growth of 31.7% YoY. However, the gross margin was down 605 bps YoY due to 1 revenue mix deterioration, 2 steep commodity inflation and 3 lag effect of price hikes. The company benefitted from a revival in the economy and higher infrastructure spending, ICICI Securities said in a report.
The brokerage firm noted that the profitability of Lloyd segment remained under stress even in Q 2 FY 22 due to negative input prices and higher operating leverage and has maintained a 'Buy' call on the stock with a target price of Rs 1,650 per share.
We model Havells to report PAT CAGR of 22.5% over FY 21 - FY 24 E with: 1 strong volume growth, 2 high single-digit price hike and 3 benefits of cost-saving initiatives and recovery in Lloyd. We remain structurally positive on the company due to its competitive advantages and growth opportunity in consumer durables, it added.