Buy Havells India; target of Rs 860: Motilal Oswal

Motilal Oswal is bullish on Havells India and has recommended buy rating on the stock with a target of Rs 860 in its January 24, 2013 research report.

“Havells India’s, standalone revenue grew 18% (in line with our estimate), EBITDA grew 12% (5% ahead of our estimate) and adjusted PAT grew 17.6% to INR804m (8.2% higher than our estimate). The key highlight for the quarter was 86bp QoQ expansion in EBITDA margin to 13.2% despite higher ad spend (3.5% of sales in 3QFY13 v/s 2.9% in 3QFY12) and Consumer Appliances contributing INR750m to 3QFY13 revenue (v/s INR840m in FY12 and INR627m in 1HFY13).”

“For Sylvania, reported revenues declined 3.7% YoY (v/s our estimate of 2% decline). EBITDA margin was 6.4% (higher than our estimate of 5.1%, up 310bp QoQ). Sylvania's sales have been impacted by muted 2.8% growth in the Americas (up 9.5% YoY in 1HFY13) and continued de-growth in Europe (down 7.5% after 9% decline in 1HFY13). Sylvania's European operations reported EBITDA margin of 5% v/s 0.8% in 2QFY13 (given price increases/ operating leverage).”

“We have upgraded our consolidated earnings estimate for FY13 by 7% to factor in the improvement in profitability at Sylvania, but maintain our FY14/FY15 estimates. Our consolidated EPS estimates now stand at INR33 (down 3%) for FY13, INR40.7 (up 23%) for FY14 and INR48.1 (up 18.2%) for FY15. The stock trades at 20x FY13E, 16x FY14E and 14x FY15E consolidated EPS. We maintain buy with a revised target price of INR860,” says Motilal Oswal research report.

Public holding more than 90% in Indian cos 

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More