Havells India Ltd. share price target

Growth Across Segments Offset by Lower Margins: Havells revenue was broadly in line with expectations. Havells core business (Ex. Lloyd) has shown a growth of 28-% majorly driven by switchgear (28%), cables (35%) and consumer durable segment (42%).

Expanding product portfolio, retail network, market share gains and revival in consumption spending will drive its future growth. However, in the near term its key segments like Switch gears & cables (50% of sales) are vulnerable to slowdown in construction sector. We lower our EBITDA margins estimates by 100bps & 30bps for FY19E & FY20E to factor in impact on margins. We expect earnings to grow by 25% CAGR over FY18-20E. Considering the near term impact on margins and premium valuation, we...

Havells India Ltd Q2FY19 results Comment Revenue decreased by 15.61% to Rs. 2190.99 Cr in Q2FY19 when compared to the previous quarter. On the other hand, it grew by 23.27% when compared with Q2FY18.

However, Lower EBITDA margin was on mainly due to 1) muted performance of Lloyd business on account of adverse season, trade inventory & forex headwinds 2) delay in passing on higher RM prices in cable segment. ECD business (excluding Lloyd) recorded a strong growth of 42% YoY driven by new launches and fan segment. Switchgear, cable and lighting business (excluding EESL) have witnessed demand traction from government & residential projects. Havells' has not been participating EESL's low margin business as a...

Q2 was weak on the margin front with input cost pressures visible. The one bright spot has been the inventory build-up for the festive season in the ECD business, as evident in the increased capital use. We expect some price action in H2 to offset rising costs. Festive season expected to be good should get reflected in Q3 earnings. We believe in Havells structural story and maintain Buy with a TP of ` 680 valuing stock at 40xFY20E. Q2 weak on the margin front on input cost pressure Havells revenue at `21,910mn at 23% YoY growth, was ahead of our estimate by 11%. It was driven by switchgear, cable and ECD segment...

We value based on 36x P/E on Sep-20EPS with TP of Rs 693. Maintain BUY. Havells reported a mixed bag with strong revenue growth (23% YoY vs exp. of 16% YoY) but EBITDA margin pressure which was higher than expected (-247bps vs. exp. of flat). Core business growth of 28% was broad-based (excluding lighting) with ECD segment outperforming (42% YoY).

17 October 2018 grew 23 % YoY to INR22b, ahead of our estimate of INR19.6b. Gross margin shrank 400bp YoY to 38.3 %. EBITDA, adjusted for forex gain of INR47m, stood at INR2.6b (+1.7 % YoY), marginally ahead of our estimate. Ad spend increased to INR0.7b (3.4 % of sales v/s 3 % in 2QFY18), while employee costs rose 26 % YoY to INR2.0b. Adj. PAT of INR1.7b (+3.1 % YoY) was marginally above our estimate.

Havells is one of the fastest growing fan brands in the Indian market with market share at ~17% while in the switchgear market, it is the market leader in the low voltage segment with ~28% market share. Over the period, Havells has established a network of ~7,500 dealers spread across the four regions servicing ~100,000 retailers/touch points in India. It is highly successful in augmenting market share of existing products along with launching new products, which have received good response driven by high brand visibility. Recently, Havells has acquired the...

Growth Across Segments - Maintain BUY: Havells revenue outperformed our expectations by 7% on the recovery in switchgear segment and growth in Lloyd segment. Havells core business grew by 19% contributed by all the segments except lighting and fixtures segment which had a degrowth of 5.1% due to lower EESL orders.