Buy Havells India; target of Rs 684: Firstcall Research

Firstcall Research is bullish on Havells India and has recommended buy rating on the stock with a target of Rs 684 in its December 5, 2012 research report. 

“Havells India was incorporated in 1983 is a billion-dollar company. It is engaged in manufacturing of electrical and power distribution equipments. Havells has created brands like Crabtree, Sylvania, Concord, Luminance, Linolite, and SLI Lighting that are known globally. It is among the largest and fastest growing electrical and power distribution equipment manufacturer in India. The company has been involved in brand promotion by sponsoring cricket events like T20 World Cup, India- Australia Series and IPL. It has network of 94 branches/representative offices with 8000 employees working across 50 countries. In India, Havells has 11 manufacturing facilities across the country. Outside India it has 8 manufacturing units located in Europe, Latin America and Africa. The company has recently taken the initiative to reach directly to the consumers through "Havells Galaxy" – a one stop Brand Centre for all consumer appliances; lighting and electrical needs. These Brand Centres provide the customers with the complete range of consumer durable products manufactured by Havells and facilitate them with personalised services and support. Currently we have more than 140 such Galaxies across the country.”
 
“Havells India is a billion-dollar-plus organization, and is one of the largest & India's fastest growing electrical and power distribution equipment manufacturer reported its financial results for the quarter ended 30th Sep, 2012. The second quarter Income was impacted due to slower growth in industrial cable division, given the slowdown in industrial and commercial activities, but the net income of the company would have grown 24%. The company’s net profit jumps to Rs.869.70 million against Rs.702.40 million in the corresponding quarter ending of previous year, an increase of 23.82%. Revenue for the quarter rose 13.20% to Rs.9642.20 million from Rs.8518.10 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.6.97 a share during the quarter, registering 23.82% increase over previous year period. Profit before interest, depreciation and tax is Rs.1312.30 millions as against Rs.1030.90 millions in the corresponding period of the previous year.”
 
“At the current market price of Rs 605, the stock P/E ratio is at 20.38 x FY13E and 18.24 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.29.69 and Rs.33.17 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 18% and 20% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 13.28 x for FY13E and 11.64 x for FY14E. Price to Book Value of the stock is expected to be at 3.82 x and 3.16 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 684 for medium to long term investment,” says Firstcall Research report.

Public holding more than 90% in Indian cos

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