ICICI Direct's research report on Havells India
Havells reported a strong all round performance with topline, PAT growth of 40% and 75% YoY which were better than our growth expectations of 15% and 8% respectively. Improved plant utilisation coupled with control on overhead expenses helped company to report 420 bps increase in EBITDA margin to 16%. The key highlights of the call are as follows 1) Price hikes in the range of 5%-15% into different product categories 2) Pre-buying activities during Dec’20 by trade in the fear of price hikes 3) Focus on capacity building of Lloyd (to cater export opportunities in the AC business) 4) Increased focus on taping rural and semi urban markets 5) Higher margin level likely to sustain. We believe, ECD and Lloyd business are likely to grow at a CAGR of 22% and 21% respectively for FY20-23E supported by increasing semi urban penetration along with changing consumer lifestyle (work from home). We revised our revenue, earning estimates upward by 11% and 14% respectively for FY23E.
We revised our rating from Buy to Hold with target price of Rs 1255 (valuing 55xFY23E EPS)
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