Buy Havells India; target of Rs 1447: Prabhudas Lilladher

Prabhudas Lilladher's research report on Havells India

We tweak our FY23/FY24 earnings upwards and maintain ‘BUY’ rating on Havells India (HAVL IN). Improvement in ECD mostly with fan destocking and expected price hike, robust performance in cable business and expected sequential reduction of losses in Lloyd with reduction in high cost inventory & price hike, will augur well for Havells in coming quarters. We are optimistic on long term growth prospects considering 1) its diverse product portfolio covering 70% of household electric sockets, 2) is amongst top 3 players in most product categories 3) focus is on innovation and continuously driving brand affinity and 4) expanding distribution reach with emphasis on untapped rural market (through rural vistaar project covered 40,000 outlets in FY22 and planned opening of >1000 Utsav stores by FY23).

Outlook

We estimate 16.9% earnings CAGR over FY22-25 and assign a DCF based target price of Rs1,447. Maintain ‘BUY’.