Cholamandalam Securities

Havells India (Outperformer)

CMP: ₹257

Target: ₹279

Havells India Ltd (HIL) is one of India’s largest & fastest growing electrical and power distribution equipment manufacturers with products ranging from industrial and domestic circuit protection switchgear, cables and wires, motors, fans, power capacitors, CFL lamps, luminaries for domestic, commercial & industrial applications, modular switches, water heaters and domestic appliances covering the entire gamut of household electrical needs along with industry lights and cables. Havells owns some of the prestigious global brands like Crabtree, Sylvania, Concord, Luminance and Linolite and Standard Electrical.

HIL now operates a network of 90+ branches and representative offices in over 56 countries with a network of 10,000 distributors.

HIL’s standalone revenue fell 1.12 per cent during the July-September quarter of current fiscal YoY to ₹1,350 crore (up 6.5 per cent QoQ) due to deflationary pressure in cable business. Sylvania’s revenue stood at €100.7 million, down 10.5 per cent YoY owing to seasonal weakness in Europe and high base effect in project business.

Revenues from cable business fell 4.8 per cent YoY in the second quarter of current fiscal on account of deflationary pressure in cable business.

Standalone EBITDA at ₹186 crore, up 1.65 per cent YoY; EBITDA margins improved by 38 bps YoY to 13.8 per cent due to benign input cost (-130 bps) and lower ad spent (-80 bps), which was partially offset by higher employee cost (up 90 bps) and other expenses (50 bps). PAT grew 0.93 per cent YoY to ₹121 crore (up 12.4 per cent QoQ) and PAT margin expanded by 18 bps YoY to 8.94 per cent.

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