Havells India: Decent Q2 FY26 performance despite inventory challenges

Havells India Limited reported a "decent overall performance" for Q2 FY26. However, summer products, including air conditioners, fans, and coolers, experienced a year-over-year revenue decline due to a shorter summer and higher channel inventories. This impacted growth and margins, leading to elevated working capital levels, which the company expects to normalize by Q3. Cables maintained steady growth, particularly in power cables, with capacity expansion on track and the acquisition of a 39-acre land parcel in Alwar, Rajasthan.

The company anticipates inventory liquidation for old star-rated ACs in Q3 due to BEE rating changes. Contribution margins for Lloyd were affected by customer support schemes offered during the off-season but are expected to improve from Q3 onwards, with a real effect in Q4. Overall, the company aims for a 15% to 16% contribution margin for cables and wires, expecting improvements in the second half of the fiscal year with positive momentum and rural area growth.

Planned capital expenditure for FY25-26 is about INR1,450 crores, with an estimated INR1,000 crores for FY26-27. Havells continues to invest in premiumization and productivity enhancement across its product portfolio, including BLDC fans, and sees positive traction in both B2B and international segments, particularly for cables, switchgear, and air conditioners.