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# Havells Q2: Cables Grow 48%, Their Margin Falls
- URL: https://www.moatmarginresearch.com/havells-q2-cables-margin-aluminium/
- Published: 2026-10-23T01:42:31.000Z
- Updated: 2026-10-23T01:42:31.000Z
- Description: Havells grew Q2 sales 34.6%, led by cables, but cable margins fell almost four points as aluminium prices dropped. Switchgear held firm. What the filing shows.
- Author: A K Karthikeyan
- Tags: Moat Insights

**Havells India sold 34.6% more in the September quarter than a year ago, and EBITDA rose 30.5% to ₹576 crore. The growth came mostly from cables, which grew 47.9% and are now almost half of revenue. But the company kept less of each rupee of cable sales: the contribution margin fell to 13.9% from 17.7% a year ago, and Havells blames a fall in aluminium prices. A day earlier, KEI Industries, a cable maker, also reported a sharp drop in margin.**

## The quarter

| Standalone, ₹ crore        | Q2 FY26 | Q1 FY27 | Q2 FY27 |
| -------------------------- | ------- | ------- | ------- |
| Net revenue                | 4,767   | 6,510   | 6,417   |
| Contribution, % of revenue | 20.1%   | 18.3%   | 18.2%   |
| Advertising, % of revenue  | 2.7%    | 4.4%    | 2.1%    |
| EBITDA                     | 442     | 474     | 576     |
| EBITDA margin              | 9.3%    | 7.3%    | 9.0%    |
| Net profit                 | 317     | 298     | 353     |

Source: \[U\]. Profit grew less than EBITDA (11.1% against 30.5%) partly because the year-ago quarter's other income included a one-time gain of ₹45.27 crore on selling the Faridabad land and building (\[U\]).

The update's own summary: "Healthy EBITDA growth as operating leverage offset softer contribution margins" (\[U\]). Advertising fell back to 2.1% of revenue from 4.4% in June, which helped.

## Where the margin went

| Contribution margin                  | Q2 FY26   | Q1 FY27   | Q2 FY27   |
| ------------------------------------ | --------- | --------- | --------- |
| Switchgears                          | 37.3%     | 36.7%     | 38.1%     |
| Cables                               | 17.7%     | 16.1%     | 13.9%     |
| Lighting and fixtures                | 30.5%     | 31.2%     | 26.6%     |
| Electrical consumer durables         | 21.7%     | 24.0%     | 22.8%     |
| Lloyd (air-conditioners, appliances) | 1.7%      | 9.2%      | 2.6%      |
| **Total**                            | **20.1%** | **18.3%** | **18.2%** |

Source: \[U\].

- **Cables:** revenue ₹2,999 crore, up 47.9%, about 46.7% of the total (our arithmetic). The update says contribution margins were "softer YoY mainly due to cables, where fall in aluminium prices during Q2 weighed on margins" (\[U\]). The margin fell 3.8 points on last year and 2.2 points on June (our arithmetic). Havells adds that the half-year cable margin of about 15% is "in line with long term average".
- **Switchgears:** revenue up 31.3%, margin up to 38.1%. The segment's profit rose to ₹198 crore from ₹133 crore (\[U\]).
- **The rest:** the update says "rest of the portfolio held margins as calibrated price hikes offset raw material inflation", except lighting, where margins were "soft due to certain project orders" (\[U\]).
- **Lloyd** lost ₹104 crore at the segment level on revenue of ₹615 crore, against a ₹99 crore loss a year ago (\[U\]).

KEI Industries reported a similar pattern the day before: its cost of goods sold rose to 78.2% of revenue from 75.2% in June, without a stated reason (\[K\]).

## Where the cash went

| ₹ crore                                  | 31 Mar 2026 | 30 Sep 2026 |
| ---------------------------------------- | ----------- | ----------- |
| Inventories                              | 4,398       | 4,992       |
| Cash, cash equivalents and bank deposits | 2,351       | 1,190       |

Source: \[U\]. Operating cash flow for the half year was –₹160 crore, after ₹1,091 crore went into working capital; capex was ₹654 crore and dividends ₹377 crore (\[U\]). Inventory rose ₹594 crore, or 13.5% (our arithmetic), "mainly in Cables, in line with revenue growth and commodity prices"; inventory days fell to 72 from 81 a year ago (\[U\]). Havells expects full-year capex of about ₹1,400 crore, mainly for cable capacity and a new R&D centre (\[U\]).

## Moat and margin

**Focus moat: brand and distribution pricing power.** The filing supports it in switchgear, where Havells raised its margin while growing 31%, and in most consumer products, where price rises covered inflation. Cables behave differently: their price follows copper and aluminium, so a metal price fall flows through to the margin. Havells does not claim pricing power there; it calls the half-year cable margin "in line with long term average".

**Margin: down on last year, flat on June.** The total contribution margin was 18.2%, 1.9 points below a year ago (our arithmetic). The EBITDA margin was 9.0% against 9.3%.

**MoatSCORE** (Moat Screener, first pass): Havells India 5.88, AMBER; for comparison, KEI Industries 5.91, AMBER, and Polycab India 5.25, AMBER+ (\[MS\]).

## The bear case

- **The fastest-growing business has the thinnest margin.** Cables went from 43% to almost 47% of revenue (our arithmetic) while their margin fell; mix alone pulls the company's margin down.
- **Cash turned negative.** The half-year's operating cash flow was –₹160 crore, and cash fell by half in six months.
- **Lloyd still loses money**, ₹155 crore at the segment level in the half year (\[U\]).
- **Half-year profit fell** 2.8% to ₹651 crore, despite revenue up 26.7% (\[U\]).

## The case for

- **Switchgear, the high-margin core, is strong:** revenue up 31.3%, margin up 0.8 points on last year (our arithmetic).
- **Return ratios held:** ROE 17.9% and ROCE 23.5%, against 17.6% and 23.6% a year ago (\[U\]).
- **Working capital days fell** to 44 from 49 (\[U\]).

## What to watch

1. The cable contribution margin in the December quarter: back towards 15%, or lower?
2. Whether operating cash flow turns positive in the second half.
3. Lloyd's losses through the air-conditioner off-season.
4. Polycab's results, the third large cable maker, for the same aluminium effect.

## Sources

- **\[U\]** [Havells India, information update on Q2 FY27 results](https://nsearchives.nseindia.com/corporate/HAVELLS1%5F22102026141520%5FInfoUpdate%5FQ2%5F22102026.pdf) (NSE)
- **\[R\]** [Havells India, unaudited results for the quarter ended 30 September 2026](https://nsearchives.nseindia.com/corporate/HAVELLS1%5F22102026135828%5FQuickResults%5FQ2%5F22102026.pdf) (NSE)
- **\[K\]** [KEI Industries, Q2 FY27 earnings presentation](https://nsearchives.nseindia.com/corporate/KEI%5F21102026173110%5FEarning%5FPresentation%5FSep%5F26.PDF) (NSE); our earlier article: [KEI Q2: Sales Up 39%, Margin and Cash Down](https://www.moatmarginresearch.com/kei-q2-cable-margin-inventory/)
- **\[MS\]** [Moat & Margin, Moat Screener](https://www.moatmarginresearch.com/moat-screener/) and [How MoatSCORE works](https://www.moatmarginresearch.com/moatscore/)

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> Educational research, not investment advice. Every figure above is drawn from Havells India's and KEI Industries' own filings, read from the primary documents on 23 October 2026; derived figures are our arithmetic, labelled as such. MoatSCORE read live from the Moat Screener on 23 October 2026\. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.