Buy Havells India; target of Rs 1580: Motilal Oswal

Motilal Oswal's research report on Havells India

HAVL reported a miss of 4-6% on Revenue/EBITDA/PAT vs. our estimates in 2QFY24 primarily driven by lower-than-estimated profits in the Cables & Wires (C&W) segment. Soft consumer demand and capacity constraints in underground cables adversely impacted the company’s performance. Management remains optimistic for the upcoming festive season and believes that festive demand shifted from 2Q to 3Q. Commodity price normalization and product cost-led initiatives will help to improve margins. The company continues to invest in product portfolio and talent pool for sustainable growth. We cut our EPS estimates by 4%/8% for FY24/FY25 as we factor in lower margins in the ECD/Lighting segments.

Outlook

We remain structurally positive on HAVL, given its diversified product portfolio, premiumization strategy, and continued focus on brand building. We value HAVL at 53x Sep’25E EPS to arrive at our TP of INR1,580.

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