MOSL: ANNUAL REPORT THREADBARE (ART) | HAVELLS FY19-Lloyd dampens the overall performance
ANNUAL REPORT THREADBARE (ART) | HAVELLS FY19: Lloyd dampens the overall performance
Havells’ (HAVL) FY19 annual report analysis highlighted weakness at its new acquisition Lloyd which impacted the overall performance. While revenue grew by a strong 23% to INR100.7b, the EBITDA margin shrank 100bp to 11.9% due to higher import cost for consumer durable products (Lloyd). EBITDA increased by a healthy 13.5% to INR11.8b (FY18: INR10.4b), but its conversion to cash flow declined to 63% (FY18: 129%) as the reported cash conversion cycle elongated to 26 days (FY18: 11 days). FCF was negative at INR0.4b (FY18: INR11.8b), primarily due to capex for a new AC manufacturing plant (INR3.5b). HAVL continued availing receivables discounting and channel financing (without recourse), adjusted for which RoIC was at 26% (reported: 48%) and RoCE at 15% (reported: 20%). As at FY19, 42% of reported receivables (excl. discounted) at INR1.7b were overdue. Intangibles stood at INR11.7b (28% of NW) and primarily relate to the Lloyd acquisition (INR15.5b) made in FY18.
- Lloyd-led margin pressure: While HAVL's revenue growth was strong at 23% to INR100.7b (FY18: INR81.5b), EBITDA increase was modest at 13.5% to INR11.8b (FY18: INR10.4b). EBITDA margin contracted 100bp to 11.9% as RM cost increased by 140bp (to 62.4% of revenue) due to higher import cost for Lloyd (margin shrank 270bp to 5.3% as it had to import products from China in the absence of a manufacturing facility). Ex-Lloyd EBITDA margin was down by a lesser 50bp at 13.4%.
Havells India is a Fast Moving Electrical Goods (FMEG) company based in India. Co. is active across a variety of market segments with a wide spectrum of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors, Pumps, Fans, Modular Switches, Home Appliances, Electric Water Heaters, Power Capacitors, CFL Lamps, Luminaires for Domestic, Commercial and industrial Applications. Co.'s global brand names include Havells, Crabtree, Sylvania, Concord, Luminance and Standard. Co. maintains a global network consisting of 91 branches & representative offices in over 50 countries. Co.'s manufacturing plants are loacted in India, Europe, Latin America, Africa & China.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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