What explains the sharp rise in the profits of Havells for the third quarter?

After a few uneventful quarters, Havells was back in business in the Dec-20 quarter. Its Q3 PAT was sharply up 74.5% yoy at Rs.350 crore even as Havells reported 39.67% growth in sales revenues at Rs.3175 crore. Interestingly, there was growth across switch gears, lighting products, cables and electric consumer durables. Even the Lloyd consumer business division did a lot better.

Operating profits were up 108% at Rs.446 crore on the strength of higher revenues with lower advertisement costs. Consequently, operating margin expanded from 9.43% in the Dec-19 quarter to 14.04% in Dec-20 quarter. At the same time, the PAT margins also expanded from 8.83% to 11.03% on a yoy basis. Clearly, the financial traction was back as pent-up consumer demand picked up.

The company saw demand traction due to a construction and infrastructure action picking up. As a result, its largest unit of cables and electrical consumer durables saw strong growth on yoy basis as did switchgears and lighting fixtures. The Lloyd white goods business had been a big drag but even that managed a smart turn around in the quarter.