Buy Havells India; target of Rs 1460: Prabhudas Lilladher

Prabhudas Lilladher's research report on Havells India

Havells India’s (HAVL IN) reported decent revenue growth mainly with healthy growth in Cables and Lloyd business (+24.5%/19.9% YoY) with strong volume growth of 30%+/20% respectively, while ECD segment impacted due to sluggish consumer demand and disrupted summer reduced fans sales. Lighting segment impacted with deflationary trend in LED segment. Operating margin impacted from 1) softening of commodity price not fully passed on, 2) low value growth and price erosion in lighting segment, 3) higher overheads plus A&P expenses and 4) continued losses in Lloyd. Cable & Switchgear business is expected to report healthy growth of 20-25% in FY24, given B2B sustains steady demand led by infrastructure/construction. Lloyd is also expected to maintain growth momentum, through expansion in South India and venturing in EMS segment. Overall, we are positive on HAVL’s Cables & Switchgears growth prospects along with improvement in Lloyd’s revenue.

Outlook

However, margins may take time to improve given weak demand scenario in FMEG portfolio and continued loses in Lloyd. We have downward revised our FY24 earnings by 6.7% mainly with correction in margins and maintained FY25 earnings as H2FY24 is expected to see revival in demand & margins. Maintain ‘BUY’ at a DCF based target price of Rs 1,460.