Buy Havells India; target of Rs 1580: Motilal Oswal

Motilal Oswal's research report on Havells India

Havells (HAVL)’s 1QFY24 revenue grew 14% YoY, with a strong traction seen in the Cables & Wires segment, though consumer demand remained muted. EBITDA was up 11% YoY to INR4b; but was 8% below estimates as the ECD and Lighting segments reported lower margins. Cables and Wires surprised as revenue/EBIT was 11%/10% above estimates during the quarter. Management indicated muted consumer demand in Apr-May’23; though some recovery was visible in Jun’23. Urban demand was better than rural due to an uptick in construction cycle. Consumer demand as well as rural demand is expected to improve in 2HFY24.

Outlook

We recently reinitiated coverage on HAVL with a BUY rating. We estimate an EBITDA/EPS CAGR of 27%/29% over FY23-25 supported by margin recovery in the core business. We have a TP of INR1,580 on the stock.