Havells India Ltd. share price target

Q4FY21 Revenue & PAT grew by 50% & 71% YoY, led by broad based growth across the segments on account strong demand recovery in consumer and B2B business. EBITDA margin improved by 410bps YoY to 15.2% led by scale benefits, product mix, price hikes and cost rationalisation. We continue to like HAVL as a complete player in electrical & consumer durables products with strong brand recall, distribution strength and leadership position in almost all the products....

Havells (HAVL)'s 4QFY21 revenue grew a strong 50% YoY (two-year CAGR: 10%), with the recovery seen in 3QFY21 sustaining in 4QFY21 as well. The company continued to accrue market share gains in its core portfolio at the cost of the unorganized sector. The core portfolio reported a two-year CAGR of 11% and Lloyd posted a two-year CAGR of 5%. Lloyd performed below our expectations, with sequential growth of just 15% QoQ v/s strong growth by peers such as Voltas and Blue Star going into the summer season. This was despite Lloyd's full-year performance being fairly...

We model revenue CAGR of 18% in FY21-23E led by 22% and 17% revenue CAGR of ECD and Lloyd business, respectively. We believe Havells' focus on strengthening Lloyd brand and reducing dependency on single products (by increased focus on refrigerators, washing machines) would help drive sales of Lloyd, going forward. Besides, Industrial products such as cable, switchgear would also grow at CAGR of 15% led by increased government...

Havells India Ltd (HAVELLS) topline grew 39% Y0Y/29% YoY with Price hikes, pre-buying, higher rural sales (up 100% YoY), increased distribution reach to tier II/III towns, efficient supply chain and market share gains from both smaller organized and unorganized players were the main contributing factors. ECD segment revenues increased 46% YoY on account of strong recovery of B2C business (fans, water heaters, domestic appliances). Lloyds Revenues grew by 70.3% YoY to `5.1bn supported by pre-buying seen as dealers fear price increase from next quarter, pent up...

Q3 Revenue & PAT grew by 40% & 74% YoY, led by festive & pentup demand, restriction in imports and market share gains. EBITDA margin improved by 430bps YoY to 16% led by scale benefits, product mix, price hikes and cost rationalisation. We upgrade our EPS estimates by 27% & 18% for FY21E & FY22E, given sharp turnaround in earnings. A complete player in electrical & consumer durables products with strong brand recall, distribution strength and leadership position in...

Consumer & residential segments grew by 40% sustained demand momentum in B2C portfolio 2) market share gains across categories 3) likely gains from PLI scheme and Atma-nirbhar drive HAVL's has indicated robust outlook led by 1) improvement in consumer sentiment 2) benefits of increased distribution reach in smaller towns/ rural India and 3) market share gains from unorganized players despite some trade up stocking ahead of price increases. Lloyd remains on track to recovery benefitting from 1) in-house manufacturing in RAC 2) change in industry...

Better operating leverage help drive EBITDA margin Havells has benefitted from improved plant utilisation of Lloyd (turned into profit from loss on a YoY basis). This along with control over various other operating costs (such as adv. & employee cost down by 220 & 180 bps YoY respectively) help drive EBITDA margin up by 420 bps YoY during Q3FY21. However, delay in passing on price hikes (to offset higher input costs) along with change in product mix resulted in some pressure in gross margins which were lower by 150 bps YoY. According to management, the margin...

ECD Segment registered strong growth of 18% YoY driven by consumer and residential product categories Revenue grew 10% YoY to `24.5bn in Q2FY21. The performance was driven by consumer and residential product categories (75% of total sales) with 15% YoY growth led by demand recovery. Consumer lighting grew by 15% YoY while domestic wires grew by 19%-20% YoY. Fans industry registered single digit growth, but the company grew faster than competition. The growth was aided by rural demand as well as e-commerce sales. Within the consumer and residential portfolio, rural forms 4% of total sales and has grown by 140% YoY....

Despite premium valuation, we upgrade HAVL to Hold from Sell considering sharp turnaround in earnings. Q2 Revenue & PAT grew by 10% & 79% YoY, as demand revived with ease in restriction and strong operating performance. EBITDA margin improved by 130bps YoY to 17.2% on account of better product mix and significant cost rationalisation. We upgrade our EPS estimates by 63% & 11% for FY21E & FY22E, given sharp turnaround in earnings....

24 September 2020 its entry into the Refrigerator product category with the launch of 25 new models of Direct Cool, Frost Free, and Side by Side refrigerators. Going ahead, the company aims to launch 25 additional refrigerator models and a new range of dishwashers by Diwali 2020. Assuming INR10k as the price of the base model (190-liter Direct Cool refrigerator) implies a 1213% discount on a like-to-like basis v/s products offered by key brands such as LG, Samsung, and Whirlpool. The new products launched would be available across pan-India Lloyd brand stores, offline dealers, and Lloyd online e-stores. Top 3 players in the Refrigerator category LG, Samsung, and Whirlpool occupy ~80% market share. Videocons exit has resulted in market share gains for the Top 3 players, with Whirlpool being the biggest beneficiary owing to an attractive pricing point).

Significant cost savings help restrict fall in margin Gross margins fell ~270 bps YoY mainly due to change in mix and delay in passing on higher raw material prices. However, sharp fall in advertisement expenditure (0.4% in Q1FY21 vs. 5% in Q1FY20), 44% and 27% YoY decline in employee cost and other expenditure during Q1FY21, restricted fall in EBITDA margin to 8.8%. The management expects a recovery in sales to...

Havells India Ltd (HAVL) is a leading player in electrical consumer goods in India. Its key verticals include switchgears, cables & wires, lighting fixtures and consumer appliances....

Recovery was witnessed across all segments in June. Overall revenueswerehigherby4%yoyinJuneledby12%increasein B2Cbusiness.B2BbusinessremainedmutedinJunecompared...

HAVL's management remains cautious on the sustainability of the demand trends witnessed in May and June given localized lockdowns adversely impacting business operations. HAVL's consumer portfolio has bounced back faster, however, road to recovery in the B2B portfolio (30% of sales), comprising of industrial cables, switchgears, professional luminaire is likely...

27 July 2020 While revenue decline of 45% YoY was in line with our expectations, aggressive cost rationalization measures led to a strong beat in earnings. Employee costs were also lower by 27% YoY on account of certain voluntary actions, which should normalize from 2QFY21. As demand recovers, we expect the large part of these cost elements to scale back. However, the outlook remains hazy due to the local lockdowns; hence, the management appears cautious on extrapolating the June run-rate to the coming quarters. The results of peers suggest that with a demand level of 8085% v/s last year in July, Factoring cost savings in 1QFY21, we increase our FY21/FY22 EPS estimates by 14%/4%. The deterioration in working capital was disappointing, but this should normalize in the coming quarters. Maintain Revenue declined 45% to INR14.8b and was in line with our expectation.

It has expanded its dealer network to 11200 from 10500 last year, while also developing suppliers, sourcing 78% of its needs from local suppliers/MSME. They have bolstered their board strength with senior industry people like BP Rao, ex CMD, BHEL and SS Mundra, ex DY Governor, RBI as replacement to board members completing terms. Interestingly, employee strength fell 12%, from 6,536 to 5,781- the first time in 5 years, after a CAGR of 13% from FY16-19, as part of its delayering and cost rationalization. Further observation is that per employee cost (Emp...

Havells India Ltd (HAVL) is a leading player in electrical consumer goods in India. Its key verticals include switchgears, cables & wires, lighting fixtures and consumer appliances. We downgrade HAVL to Accumulate from Buy on account earnings downgrade. However, we believe that current headwinds have been priced-in. We expect a gradual revival in demand starting from H2FY21E, as situation normalises....

The cable and lighting segment of the company reported a sharp decline in revenue by 24% and 31%, respectively, in Q4FY20. The company reported strong demand traction in January-February 2020 wherein Lloyd, ECD and switchgear businesses grew 45%, 23% and 15%, respectively. The lockdown situation in March dragged down overall revenue for Q4FY20. According to the management, had the lockdown not happened, the Q4 revenue could have grown 9% YoY (translates to ~| 800 crore of revenue loss in last 15 days of March 2020). We expect a gradual recovery in demand...

Lost sales on account of COVID-19 were higher than expected at INR8b (or 25% of 4QFY20), resulting in 13%/16% miss in revenue/adj. We have cut our FY21E/F22E earnings by 30%/13% as we have factored in (a) the likely lost sales in 1QFY21 as well as the weak primary sales in the UCP segment for FY21 until inventory normalizes, and (b) the weak industrial activity related sales in cables and wires and the switchgear segment. The company lost 25% sales due to the Excluding the COVID-19 crisis, 4QFY20 could have seen growth of 9% YoY. Industrial sales make up 20-22% of HAVLs revenue, the rest is consumer We have cut our FY21E/F22E earnings by 30%/13% as we have factored in (a) the likely lost sales in 1QFY21 as well as the weak primary sales in the UCP segment for FY21 until inventory normalizes, and (b) the weak industrial activity related sales in cables and wires and the switchgear segment.

Initial recovery in demand to be pull based rather than push based. We cut HAVL's FY21/FY22 EPS by 13% and 7% given Covid-19 led disruption in demand especially in summer season products (Room AC, Air coolers) and longer recovery cycle in industrial products (industrial cables & switchgears, professional luminaries). We expect demand for HAVL's consumer portfolio to bounce back faster led by ECD segment, however B2B segments will remain a near term drag. Slump in switchgears and cables is likely to get...