Thread by @ValueEducator

#HavellsIndia Q3 FY22 concall highlights:⚡🔌

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1. 15% revenue growth over last year with a 27% CAGR over 2 years. 2. Volumes were flat.
3. Festive demand was encouraging, however demand tapered in later part of Q3, owing

to high inflation and then omicron scare.
4. The company increased the spending on brand promotion which is expected to continue
5. Margins have been under pressure with elevated commodity costs and partial transition in pricing especially in consumer durables

6. Last few weeks have seen the return of COVID-led anxiety in the demand market. But unlike last year, the recovery is expected to be swift.
7. Price hikes were not taken in December and January because the best season is Feb-March-April. Price hikes have been announced and

will kick in from February. It will be a gradual increase so that it can be absorbed by the trade and the consumers.
8. Raw materials continue to show volatility in this quarter. So it is difficult to estimate how much price increase will be required to maintain margins.

9. Last couple of years have been very difficult for summer products like air conditioners, fans etc. Last 2 quarters are not the season for those products, so the demand scenario will only be clear in a couple of months.

But they are expecting a strong demand for the rest of the season because the COVID scare is not there anymore and there is pent up demand.
10. The extent of price increase is between 5-10% in consumer durables. There might be more price hikes as the season starts kicking in.

It all depends on how the raw materials pan out in the coming quarter.
11. PLI is for specific components and not the final product. So it is not very meaningful to the company.
12. The idea of launching washing machines under the Lloyd brand is to make it a

complete brand in consumer durables. It will take 2-4 years to do that. Meanwhile air conditioners are still the main product of the company.
13. The idea of manufacturing a washing machine is to have complete control on the innovation

and costs so that they can get a meaningful market share in 3-4 years.
14. The company is expecting Lloyd to grow because of the low base. They also don’t see a major impact of high expenditure. So as price increases kick in, the brand will be in a good position.

Lloyd will continue to invest in brand building over the next 2-3 years
15. There is a renewed focus by the company on newer channels like modern trade and ecommerce, they are going to go where the customer is. But the margins on all channels are the same.

16. Lighting has seen less price action compared to other segments. This is because the components that go into lighting are not witnessing a high level of inflation. The structural growth in this segment is coming through improvement in distribution, reach and product addition.

17. Industrial and Infrastructure segments have also started increasing in volumes. So professional lighting is seeing decent growth.
18. Of the total advertisement and promotion expense, Lloyd makes up for about 5-6%.

19. They have observed over the last one year that the construction industry has started to do well after a very long period of slow growth.
20. Infrastructure demand has also started picking up really well. So they are expecting very strong demand in these segments.

21. The distribution for Lloyd presently is very different from what it was a few years ago. They are far more deeply penetrated. They are present in most of the modern format chains. They have invested in the online space as well in the last few years.

So Lloyd is a far more available brand than what it was a few years ago.