The trading firm that became electrical equipment behemoth

Havells India Limited

Know the Company

Havells India Limited (Havells), headquartered at Noida, in Uttar Pradesh is a leading electrical equipment manufacturer in India, known for its extensive product range and strong global presence. The company’s operations are categorized into four major segments such as cables, switchgears, lighting, and electrical consumer goods.

The company’s product portfolio comprises a variety of electrical products including industrial and domestic circuit protection switchgear, cables and wires, motors, fans, modular switches, home appliances, air conditioners, electric water heaters, and power capacitors. The Company is also a prominent player in the lighting solutions market, offering LED lighting, lamps, and luminaries.

Havells has 15 manufacturing units and a warehousing space of approximately 42 lakh sq. ft., and maintains 48 offices across the globe to support its extensive operations.  The Company’s domestic manufacturing plants are located in Delhi NCR, Alwar, Baddi, Faridabad, Haridwar, Neemrana and Sahibabad. The Company has strong global presence across 50 countries with manufacturing units in China, Europe, Africa and Latin America. Promoters holding of 59.43% equity stake and an institutional investors stake of approximately 24.83% as of as of March31, 2024.

Strengths

Havells India Limited, which began as an electrical goods trading company, has evolved into a major manufacturer of electrical and power distribution equipment. Over the years, Havells has expanded its operations and diversified its product lines through strategic acquisitions and organic growth. Major acquisitions include the purchase of Sylvania in 2007, which significantly expanded its international footprint, and takeover of the ‘Lloyd’ brand in 2015 for consumer electronics and home appliances. These strategic acquisitions have strengthened Havells’ market position, allowing it to cater to a broad customer base and enhancing its growth trajectory.

Through continuous innovation and commitment to quality, Havells has built a loyal customer base and expanded its market reach both domestically and internationally, strengthening its reputation as a trusted name in the electrical consumer goods industry.

Strong dealer and distribution network enables Havells to serve even remote areas of the country, along with this, established brand portfolio cementing its position as a leading fast-moving electrical goods company and a major power distribution equipment manufacturer. Havells’ extensive product range and close proximity to consumers allow it to penetrate deeper into homes, strengthening its market presence and brand loyalty.

Leveraging the latest technologies, Havells ensures that its products not only enhance comfort and convenience but also provide a safe home environment. This commitment to quality is reflected in the company’s robust after-sales service, which ensures a lasting customer experience. Products like modular switches, LED lighting, and smart home appliances are designed to meet the evolving needs of modern consumers, showcasing Havells’ focus on innovation and user-centric design.

The company is investing heavily in research and development, with a significant portion of its R&D funds dedicated to sustainable technologies. In FY 2023-24, Havells spent 46% of its R&D budget on sustainable product development, introduced a solar dual-mode micro inverter, and committed to reducing its carbon footprint by 50% by 2030. With over 700 R&D team members across four centers and substantial investments in brand building, Havells is well-positioned to maintain its competitive edge and lead in sustainable innovation. The company’s efforts in patenting new technologies and applying for 48 patents in FY 2023-24 alone, further highlight its focus on cutting-edge advancements.

Havells capitalizes on opportunities in growing and under-penetrated product categories, driven by increasing urbanization, higher disposable incomes, and enhanced electrification in semi-urban and rural areas.

The government’s focus on infrastructure development, including highway construction, railway modernization, and airport additions, further fuels demand for Havells’ products. Additionally, favorable demographics, with a young population and a significant working-age group, provide a key demographic dividend for India.

The rising demand for premium, technologically advanced IoT products positions Havells to benefit from the evolving market landscape. With a diverse product portfolio and multiple consumer brands, Havells is poised to continue its growth and deliver long-term value to investors, making it a compelling investment choice.

Havells has recently announced a strategic partnership with Jumbo Group to enter the kitchen appliances market in the UAE. This alliance will expand Havells’ product portfolio and market reach while enabling Jumbo Group to establish a significant presence in the Middle East. The partnership will launch Havells’ premier kitchen appliances, including advanced mixer grinders, initially available online through Jumbo’s e-commerce platform, followed by distribution in retail stores. Jumbo Group will also distribute Havells’ products to retailers across the UAE, helping to develop the brand’s presence in the Middle East and Africa region.

Havells India Limited is set to expand its air conditioner manufacturing capacity to meet rising demand. This expansion will result in a combined capacity of 30 lakh units annually. The total proposed investment for this capacity enhancement is estimated to be between Rs 50 to 60 crore, which will be funded through internal accruals. The expansion is expected to be completed by Q4 FY 2025.

In line with its commitment to sustainability, Havells plans to ramp up its solar power capacity to around 16 MW. The company expected to achieve this by installing a 4.6 MW solar power plant at its Alwar facility in the upcoming fiscal year. This expansion will enable Havells to meet 67% of its total electricity demand through renewable energy sources, significantly reducing its Scope 2 emissions. Currently, Havells has a solar power generation capacity of 11.26 MW.

Financials

Havells posted net profit of Rs 449 crore for the quarter ending March of FY24, marking a significant increase of 24% compared to the previous year’s figure of Rs 362 crore during the same period. The company’s revenue from operations for the same period also increased by 11% (YoY) in Q4 of FY24 to reach Rs 5,434 crore, compared to Rs 4,849 crore recorded in the corresponding period a year ago. For the FY2023-24, the Company reported revenue of Rs 18590 crore and net profit of Rs 1271 crore as against Rs 16911 crore and Rs 1072 crore respectively reported in the FY2023.

Industry Structure and Outlook

The Indian consumer electrical industry comprises a diverse range of products that cater to both residential and commercial sectors, reflecting the country’s growing urbanization, increasing disposable incomes, and flourishing middle-class population. Key segments within this industry includes appliances such as air conditioners, refrigerators, washing machines, and kitchen appliances, along with essential electrical goods like fans, lighting solutions and power distribution equipment. Rapid technological advancements, coupled with changing consumer preferences towards energy-efficient and smart appliances, are driving innovation and product differentiation among industry players. Moreover, government initiatives promoting electrification in rural areas and infrastructure development further bolster demand across the sector.

Havells targets to continue expanding its product portfolio and market presence, both domestically and internationally. The company remains committed to leveraging technological advancements and sustainability practices to boost growth and drive innovation in the electrical equipment sector.

Risks

Havells operates in an industry where growth is predominantly dependent on consumer spending. Economic slowdowns typically affect consumer spending and investment sentiment, impacting demand for electrical equipment and consumer appliances. Therefore, even a small slowdown in economic growth is a major concern for the consumer electrical industry. A reduction in GDP growth, influenced by global or domestic factors such as geopolitical tensions or economic downturns in major markets, also impede the Company’s short-term growth prospects.

Havells is vulnerable to fluctuations in commodity prices, those using key raw materials for manufacturing. Escalations in commodity prices could increase production costs, potentially impacting the affordability of finished goods and consumer sentiment. Managing these cost pressures while maintaining competitive pricing could pose challenges.

The electrical equipment industry faces heightened competition due to the presence of established players and the potential entry of new, disruptive competitors. Increased competition, coupled with aggressive pricing strategies from competitors, could lead to price wars and reduced profit margins.

Sector: Consumer Discretionary

Market Price: Rs. 1911.20 as on today

FV: Rs 1/-

Stock Name: Havells India Ltd

BSE Code: 517354, NSE Code: HAVELLS

Market Cap.: Rs 118258 Cr

Book Value: Rs. 119

Segment: Consumer Electronics

Incorporation: 1958

Headquarters: Noida, Uttar Pradesh