Accumulate Havells India; target of Rs 1381: Prabhudas Lilladher

Prabhudas Lilladher's research report on Havells India

We change FY22/FY23/FY24 EPS estimate by -2.2%/ -2.3%/ 0.5% given 1) margin pressures due to input cost inflation 2) moderating near term demand due to inflation, omicron scare. HAVL negatively surprised on GRMs for consecutive quarters due to inability to pass on RM inflation as 3Q closed on a soft note. However, with not so severe 3rd wave, management remains optimistic on demand resilience & will initiate gradual price hikes in coming months, which in our view will enable sequential margin improvement.

Outlook

We expect HAVL to benefit from demand uptick in both Consumer & Industrial/Infra (25% of sales) portfolio given 1) Diverse product portfolio covering 70%+ of household electric sockets 2) Amongst top 3 players in most product categories (except Lloyd) 3) long runway for growth within current categories 4) Lloyd portfolio gaining traction & 5) focus on innovation & expansion of distribution reach. We estimate 17.9% earnings CAGR over FY21-24. Maintain Accumulate with DCF based TP of Rs1,381.