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Target: ₹1,209
CMP: ₹1,152.55
Havells India has reported PAT ahead of consensus/our estimates supported by better performance in the Wire & Cables segment and lower loss at the Lloyd level. Sales growth of 13 per cent y-o-y was on the back of 30 per cent/17 per cent growth in the Lloyd/Cable segments, respectively.
Cable EBIT margin came in at 11.5 per cent vs 10.4 per cent y-o-y and 6.3 per cent q-o-q. EBIT loss at Lloyd stood at ₹60 crore against a loss of ₹83 crore q-o-q.
While B2B demand was supported by demand from the infrastructure and industrial segments, B2C demand has been impacted by retail inflation.
Amid retail inflation, consumer demand has remained sluggish. On the other hand, B2B growth was supported by investment in the Industrial and Infrastructure segments.
The RAC (room air-conditioner) segment has been witnessing hyper competition with negligible price hike, despite rise in raw-material price in the past few quarters. High-cost inventory continues to hurt margins. The second factory in Sri City is expected to start production in Q4-FY23.
We maintain Hold on the stock, with Dec-24 TP of ₹1,209/share (₹1,190 earlier), as we roll forward our valuation. We cut our FY24/FY25 EPS by 3-5 per cent, largely to account for the slower recovery in Lloyd.
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