Financial Performance Summary

Q2 FY27 Financial Highlights

  • Consolidated Net Revenue: ₹1,853 crore, representing 38.2% YoY growth
  • Half-Year Revenue (H1 FY27): ₹3,664 crore, representing 30.5% YoY growth
  • Gross Margin: 34.3% in Q2 FY27 (vs 37.6% in Q2 FY26 and 36.9% in Q1 FY27)
  • EBITDA (excluding other income): ₹168 crore, representing 53.7% YoY growth
  • EBITDA Margin: 9.1% in Q2 FY27 (vs 8.1% in Q2 FY26)
  • Profit After Tax (PAT): ₹112 crore, representing 71% YoY growth (vs ₹65 crore in Q2 FY26)

Segment-wise Performance

Electronics Segment (Stabilizers, UPS Systems, Inverters & Batteries, Solar panels):

  • Revenue growth of 60% YoY in Q2 FY27
  • Solar Power Products led the growth, with Digital inverter and Battery also contributing strongly
  • Solar business currently focused on Southern markets, with plans to expand to Northern and Eastern markets
  • Margin decline of 380 bps sequentially due to product mix changes and pricing transmission lag

Electricals Segment (Wires, Pumps, Switches and Switchgears):

  • Revenue growth of 41.2% YoY in Q2 FY27
  • Wires growth primarily price-driven (approximately 40% price increase, volumes flat)
  • Healthy volume growth in Pumps, Switches and Switchgears

Consumer Durables Segment (Ceiling Fans, Water Heaters, Kitchen Appliances, Air Coolers):

  • Revenue growth of 20% YoY in Q2 FY27
  • Strong momentum in induction cookers and broader Kitchen Appliances portfolio
  • Fans and Water Heaters registered strong growth
  • Margin improvement of 300 bps YoY in Q2 and 400 bps for H1 FY27

Sunflame Performance:

  • Revenue growth of 20.5% YoY in Q2 FY27
  • Functional integration completed
  • Growth driven by categories excluding gas stoves (which were flat due to shift to induction)
  • Product portfolio refresh underway across all categories (Gas Stoves, Chimneys, Builtins)

Regional Performance

  • South India: 51% growth in Q2 FY27 (driven by extended summer and low channel inventory)
  • North India: 23% growth in Q2 FY27 (impacted by intermittent rainfall)

Margin Analysis

  • Gross margin moderation attributed to higher input costs and product mix changes
  • Current margin gap of 3-4% due to lag in pricing transmission
  • Price increases of 6-12% already implemented across categories
  • Additional 2-3% price increases planned to address current gap
  • A&P spend at 2.3% of revenue, consistent with historical levels

Strategic Initiatives and Business Updates

Solar Power Systems Business:

  • Focus on residential segment (3kW to 10kW systems)
  • Selling through system integrators (similar to Solar Water Heater model for past 22 years)
  • Complete branded solution (V-Guard panels, inverters, distribution boxes)
  • Working capital requirements similar to rest of company
  • Manufacturing capabilities still being developed

Lighting Business Launch:

  • Initial launch 3-4 months ago
  • Currently in test market phase in select districts
  • 40-50% of planned SKUs launched
  • Full portfolio expansion targeted for April-May 2027

Product Development:

  • Target 18-24% of non-wire revenue from new product development (NPD)
  • BLDC fans represent 35-40% of ceiling fan portfolio
  • Water purifier business expanding from e-commerce to broader distribution
  • Kitchen appliance extensions including Air Fryers in development

Distribution Strategy:

  • General trade represents ~70% of revenue
  • Modern trade, e-commerce and canteen stores represent ~30%
  • Adding 3,000-5,000 new customers annually
  • Under-indexed in e-commerce compared to industry (conscious choice)

Capital Expenditure and Investments

  • FY27 capex planned at ₹150 crore
  • Continued investment in R&D innovation center focused on electronic capabilities
  • Long-range innovation group working on 5-year development cycle products

Demand Outlook and Guidance

  • Channel inventory described as normal
  • Expect mid-teens volume growth in H2 FY27 (moderating from H1)
  • Confident in sustaining growth momentum in upcoming quarters
  • Monitoring geopolitical situation for supply chain impacts

Other Business Updates

  • Gegadyne Investment: Technology commercialization with 3 customers, pilot orders with V-Guard may commence
  • New Competition: Monitoring new wire market entrant, minimal impact observed so far
  • Rooftop Solar Policy: Government subsidies currently available, expected evolution to storage+generation models

Conference Call Participants

Management:

  • Mr. Mithun K. Chittilappilly – Chairman and Managing Director
  • Mr. Ramachandran V. – Director and Chief Operating Officer
  • Mr. Sudarshan Kasturi – Senior Vice President & Chief Financial Officer

Moderator: Ms. Arshia Khosla – Ashika Institutional Equities

Analysts Participating: Rahul Agarwal (Ikigai Asset), Sameer Gupta (IIFL Capital), Keshav Lahoti (HDFC Securities), Naushad Chaudhary (Aditya Birla Sun Life AMC), Veenit Pasad (Investec), Achal Lohade (Nuvama Institutional Equities), Lakshminarayanan K G (Tunga Investments), Deepak Lalwani (Unifi Capital), Nikhat Koor (Dolat Capital), Rabindra Nath Nayak (Nirmal Bang)