Anand Rathi

Havells India (Buy)

CMP: ₹680.2

Target: ₹788

In its latest quarterly results, Havells recorded net revenue growth of 23 per cent at ₹21,909 million as against ₹17,774 million in same quarter previous year. Net profit increased 4 per cent to ₹178.6 crore from ₹171.1 crore in the previous year quarter. While Lloyd’s performance was affected by adverse season, channel inventory and forex headwinds, all other key business segments reported solid double digits growth in the quarter.

Havells looks to drive growth with technology upgradation. Channel expansion remains one of the key strategic initiatives of the company, focussed on modern format retails, brand stores and online platforms along existing relationships with distributors and direct dealers.

In terms of guidance, management expects cable and wire business margin in the range of 15 per cent to 17 per cent in the coming quarters, while the range for lighting is expected at about 27 per cent to 30 per cent. Post completion of the Lloyd plant, Capex is expected in the range of ₹200-250 crore every year.

With solid fundamentals and favourable macro traits, we believe the company is well positioned for long-term growth and initiate our coverage on Havells with a ‘buy’ rating and a target price of ₹788 a share.

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