Strong 35% growth masks margin compression; stabilization expected Q3+

Delivered ₹6432 Cr, up 34.6% YoY (₹4775 Cr prior year)

OPM 8.9%, NPM 5.4%; full EBITDA figure not stated in delivered result

Overall OPM 8.9% Q2; cable segment margins clearly below long-term due to aluminium price deflation

Lloyd segment grew 28.5% (stated in call); but margin underperformance acknowledged

Switchgear contribution margin normalization to 38-40% range being pursued post Q1 dislocation

Q1 FY27 call expected margins to stabilize. Q2 delivered further 380-bps compression. Management now targets return to 15% normalized level only in Q3+, pushing full-year margin expansion hopes to FY28.

Lloyd 28.5% growth held but no profitability timeline given. Management shifted from prior 'build distribution' tone to 'medium-term guidance we'd like to avoid'—implicit admission of near-term margin headwinds persisting.

Prior guidance on capacity expansion for cables, wires, renewables confirmed. Majority on medium/high-voltage cables; expansion on track per management.

Management emphasized scale-up proceeding 'healthily' with margin visibility. Treating as long-term brand/distribution business, not commodity. Peak revenue target ₹300 Cr quarterly mentioned but early-stage de-risking.

Growth healthy, spillover from Q1 present. Switchgear mainly B2C residential (not order-based). Volume growth ~double-digit, pricing actions helping. Margins normalizing from depressed Q1 to 38-40% long-term range.

Volume growth more substantial than pricing. Under-absorption due to off-season manufacturing overhead not passed on; expects Q3+ margin recovery with pricing hikes 5-7% across portfolio.

Too early to quantify peak volumes/margins. Treating as brand & distribution business, not commodity. ₹300 Cr quarterly target mentioned but focusing on margin building, not scale-at-any-cost.

New entrants using brand-channel strategy, not technology/factory. Market consolidation from unorganized sector. Established players with deeper distribution and influencer management can protect. Industry-leading growth early in wires cycle.

Aluminium price decline root cause. Normal contribution 15%, h1 achieved that level. Pricing actions in Q2 and Q3+ to offset inflation. Margin recovery tied to commodity stabilization and channel absorption.

Building brand and distribution (ongoing 6-9 month reset). Medium-term focus on annual profitability. ROCE 23% currently; expects improvement as capex matures. Won't give specific timeline to avoid overcommitment.

₹14B FY27 capex reaffirmed, mostly cables & wires C&W and R&D. Medium/high voltage and underground cable expansion on track. Most capex on MV and HV; LV capacity adequate.

Factory not yet fully on steam. RAC ~75% of business, targeting non-RAC to 60% long-term. Growth decent from new capacity; season will help. Expect pickup as factory scales next year.

Currently ~23%, comfortable with this given expansion underway. Incremental business achieving decent ROCE from existing categories. New categories take time. Returns will improve as leverage increases and margins improve.

Management avoiding specific guidance. 35% Q2 growth suggests strength but acknowledge macro uncertainties and commodity volatility

Cable margins target return to 15% normalized via pricing (5-7% hikes), commodity stabilization. Lloyd under-absorption to ease post distribution reset.

Aluminium volatility moderating; pricing actions gaining market acceptance

Most capex directed to MV/HV cables and underground cables. R&D centres in Delhi, Bangalore operational. Expansion phased through FY27-28+

Cable segment (major contributor) saw 380-bps contribution margin decline YoY due to aluminium deflation lag. If inflation resumes or deflation stalls, pricing actions may not stick.

Lloyd grew 28.5% in revenue but profitability lags due to under-absorption (off-season manufacturing overhead). Management gave vague 'medium-term' turnaround guidance without specific milestones or ROI visibility.

Crompton and Ultravolt recently entered wires segment using brand-channel strategy. While management sees them as traders (not technology/factory players), they could disrupt established channel economics and pricing discipline.

Management cited 'macroeconomic uncertainties persist and commodity prices remain elevated' in opening. Q2 seasonal dip also noted. Pricing hikes in Q3+ may face consumer resistance if demand cools.

Management is transitioning Lloyd and Havells from push-led (product into channel) to pull-led (consumer-driven demand). This 6-9 month reset could cause temporary inventory pressure and margin headwinds if execution falters.