Havells India Ltd. share price target

Our interaction with managements and dealers indicates significant prebuying activity of consumer goods during January-February 2020 on fears of supply related issues from China. While companies have secured supplies to avoid any disturbance in sales in Q4FY20, demand was negatively impacted in March 2020 owing to holiday and post that lockdown across countries. We also believe a late recovery in demand for consumer goods will also impact Q1FY21 performance due to 1) shortage of workers (due to heavy migration), 2) shift in focus on essential goods compared to discretionary products and 3) streamlining of supply chain....

Crompton's performance has been luke-warm over the last 4-6 qtrs resulting in stock underperformance (de-rating). We believe both segments (ECD and lighting) need to fire together for the stock to re-rate (possible in FY20). Market share gains in fans, success in appliances, GTM benefits, cost savings program and acceleration in B-B lighting will be the key medium term drivers. Reasonable valuations along with structural long-term initiatives drives our BUY rating. Cromptons weak lighting show continued to overshadow strength in ECD. ECD posted 11% growth despite several macro headwinds (Havells posted flat). Market share gain in fans and strong volume growth for appliances led the growth. While, lighting remained a drag and posted 11% decline in revenues. Price erosion in LED and weak order flows from Govt/EESL continued to impact lighting despite healthy volume growth. We model weak revenue growth for lighting for two more quarters (price erosion happened in July19). Co is committed to invest distribution and branding to drive premiumisation and market share gain for fans and lighting. We cut EPS by 2% for FY20-22 to factor weak lighting show. Weak lighting show is also overshadowing valuation potential of ECD business. We value the co at 35x on Dec-21 EPS, arriving at a TP of Rs 333. Maintain BUY.

We upgrade HAVL to Hold as we believe that near term demand headwinds as well as earnings downgrades have already been factored in stock price. Q3 Revenue declined by 10% YoY on account of weak macros, tight liquidity situations, slowdown in infrastructure spending and muted consumer sentiments impacted overall demand scenario. EBITDA margin was stable at 11.8% due to cost rationalisation. PAT grew by modest 2.4% YoY supported by tax cut. We lower our EPS estimates by 9.2% & 8.6% for FY20E & FY21E, as we factor the impact of Q3 on our estimates....

Havells India Ltd (HAVELLS) topline declined ~10% YoY and grew ~2% QoQ to `22,733mn due to decline in demand across geographies, sectoral liquidity challenges and slowdown in infra segment impacting industrial cables, professional lighting and industrial switchgear sales. ECD segment grew ~1% YoY and ~6% QoQ with gain in market share. Sequentially Lloyds and ECD...

The company witnessed sluggishness in demand for industrial products (such as power cable and industrial switchgear category) led by a slowdown in government offtake. In addition to this, a sharp price erosion in the LED panel and lighting business also aided muted topline growth for the company in Q3FY20. However, the management expects a better demand scenario in Q4FY20 led by a revival in consumer sentiments with a recovery in demand of Lloyd's air conditioner business. Also, dealer addition in rural India coupled with stabilisation of new air conditioner plants and launch of...

Havells has consistently gained market share in most of its categories even during a challenging environment. Core business will recover with improvement in demand trend and expected relief in liquidity in trade channels. Favourable base over the next 4 quarters (10% decline in EBITDA) will lead into an earnings upcycle. We expect margins to recover faster than volume growth. Amidst slowdown, management plans to tighten the belt on non-essential costs. We see enough levers for margins to mean revert. We recently (2QFY20) upgraded stock to BUY post seeing 16% fall in stock price. We expect worst is behind for Havells and healthy performance will re-rate the stock. Havells reported another let down. Co has been challenged by (1) Slowdown (real estate, industrial and govt projects), (2) Liquidity issue leading to low trade inventory and (3) WIP in Lloyd. We believe earnings upcycle will begin from 4QFY20 onwards led by favourable base, channel filling opportunity and gradual recovery in demand. We cut our EPS by ~6% for FY20-22 to factor slower recovery. We value Havells at 36x on Dec-21 EPS, our TP is of Rs 710. Maintain BUY.

Havells India (HAVL) has reported a dismal performance in 3QFY20, with revenue declining by 10% YoY to Rs22.7bn owing to lower revenue across segments led by slowdown especially in B2B segment. Switchgear revenue fell by 6% YoY due to slowdown in industrials switchgear owing to sluggish infra and govt-driven projects. Revenue from Cable & Wire segment declined by 13% YoY due to lower realisation in power cables and low single-digit growth in domestic wires business. Lloyd revenue fell by 16% YoY due to disruption in LED TV business. ECD segment also disappointed with flat sales, which has been supporting the growth since several quarters. EBITDA margin remained flat on YoY basis at 11.8% due to lower share of...

22 January 2019 Havells weak operating performance in 3QFY20, led by 10% overall revenue decline, has led to the third consecutive quarter of cut in earnings estimates. While the base is favorable, Havells should regain double-digit growth in FY21, if improvement in the liquidity scenario for overall consumption revival is supportive. Overall, revenues declined 9.9% YoY to INR22.7b (v/s 14% below est.). Revenue miss was largely due to weakness in Havells core portfolio (i.e. ex- Lloyd business), which declined 9%. This can be attributable to (a) weak consumer sentiment, (b) economic slowdown, (c) weak industrial demand due to muted capex, (d) dealer de-stocking on liquidity crunch, and (e) high base of last year (3QFY19 revenue growth was 29% in core portfolio). Lloyds revenue was down 15.9% YoY to INR3b. In the AC business, the company has witnessed low double-digit growth, a key positive after dull performance in the last summer season.

16 December 2019 While HAVL's revenue growth was margin contracted 100bp to 11.9% as RM cost increased by 140bp (to 62.4% of revenue) due to higher import cost for Lloyd (margin shrank 270bp to 5.3% as it had to import products from China in the absence of a manufacturing facility). Ex-Lloyd EBITDA margin was down by a lesser 50bp at 13.4%. to unallocated expenses, which increased to INR12.4b (12% of credit period on imports. Receivables discounting/channel financing availed were flattish at INR12.8b, 76% of adjusted receivable discounting, the cash conversion cycle stood at 72 INR11.0b), mainly on account of high working capital requirement (increase of INR4.8b v/s decline of INR2.7b in FY18). Higher capital expenditure at INR5.0b, mainly for construction of Lloyd's AC manufacturing plant (INR3.