Havells India corrected more than two percent on Thursday morning deals, a day after its April-June quarter results wherein the homegrown consumer appliances firm's operating margin and profit failed to cheer the Street.

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Havells India's net profit surged a mere 3.47 percent year-on-year (YoY) to Rs 242.43 crore compared against Rs 234.3 crore in the corresponding period last year. The miss in profit was even sharper at nearly 29 percent against a CNBC-TV18 poll expectation of Rs 341 crore.

Global brokerage CLSA, however, sees around 19 percent upside in Havells India, with a target price of Rs 1,430 with an 'outperform' rating. Havells India stock price were quoting at Rs 1,256 on BSE at 2.53 pm, up nearly 3 percent and an almost 5 percent surge from the intra-day low price of Rs 1,197.35.

CLSA noted that Havells India's operating margin fell 320 basis points on a QoQ basis to 8.5 percent which is the lowest in more than a decade.

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Have a look at the company's earnings performance:

The huge miss on earnings before interest tax depreciation and amortisation (EBITDA), margins and net profit was driven by high raw material cost and advertisement spends.

The company said that a significant and sudden decline in commodity prices caused price volatility, particularly in the cable segment. It added that benefits from cost moderation will reflect in a couple of quarters.

Meanwhile, advertisement spend is in line with its plan and substantially higher from previous quarters. The demand outlook is stable in consumer and residential segments with slight deferment in the industrial and infrastructure segment.

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First Published:Jul 21, 2022 3:17 PM IST