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Chola Securities
Havells India (Outperformer)
CMP: ₹797
Target: ₹853
HIL’s standalone revenue grew by a meager 8.6 per cent y-o-y to ₹2,750 crore. This slowdown was largely due to extended winters and impending general elections.
Revenue from Lighting & Fixtures (L&F) business grew by 7 per cent y-o-y in 4QFY19 to ₹329 crore, impacted due to lower project orders owing to general slowdown in infrastructure segment. L&F EBIT margin plunged by 500 bps y-o-y to 26.9 per cent due to change in product mix. Project lighting business (EESL & B2G) grew by 216 per cent y-o-y to ₹50.4 crore; and margin spiked to 31.9 per cent from 10.7 per cent in 4QFY18.
Switch gear segment grew only by 11 per cent y-o-y to ₹437 crore in 4QFY19 due to slowdown in demand. Switchgear EBIT Margin contracted by 70 bps y-o-y to 37.9 per cent .
Cables & Wires segment grew 17 per cent y-o-y to ₹898 crore. Cables & Wires EBIT margin improved by 40 bps y-o-y to 17.5 per cent .
Electrical consumer durables segment grew by 9 per cent y-o-y to ₹504 crore; fans and Lyolds AC sales were impacted by the delayed onset of summer and EBIT margin fell by 100 bps y-o-y to 26.1 per cent .
Risks: Higher built-up in dealer inventory, competition from both foreign and domestic players and speedy market share gain from unorganised players.
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