Havells India hits 52-week low on weak December quarter results

The deterioration in economic macros, sectoral liquidity challenges and slowdown in infrastructure segment has disproportionately impacted demand for industrial cables and industrial switchgear.

Shares of Havells India slipped 5 per cent to hit a 52-week low of Rs 589 on the BSE in Wednesday's early morning deals after the company reported a weak operational performance for the third quarter ended December 2019 (Q3FY20).

The company’s standalone EBITDA (earnings before interest, tax, depreciation, and amortization) declined 8 per cent year on year (YoY) to Rs 267 crore. Net revenue was down 10 per cent YoY at Rs 2,269 crore during the quarter. However, the standalone net profit during the quarter remained flat at Rs 200 crore against Rs 196 crore in the previous year quarter, due to lower tax provision.

Despite softness in revenues, contribution and EBITDA margins have been maintained owning to cost rationalization and increased cost consciousness at each level. EBITDA margin improved marginally from 11.6 per cent to 11.8 per cent during the quarter.

EBITDA margin surprise is attributed to cost-cutting measures. Employee expenses were up just 4.1 per cent YoY (down 8.4 per cent QoQ) to Rs 220 crore – the lowest increase in past many years. Advertisement spends were down 15.5 per cent YoY to Rs 77 crore.

The company said the deterioration in economic macros, sectoral liquidity challenges, and slowdown in infrastructure segment has disproportionately impacted demand for industrial cables, professional lighting and industrial switchgear.

At 11:06 am, the stock had recovered from its early morning losses and was trading 1 per cent lower at Rs 613 on the BSE. A combined 9.5 million shares have changed hands on the counter on the NSE and BSE so far.