Buy Havells India; target of Rs 1890: Prabhudas Lilladher

buy

Prabhudas Lilladher's research report on Havells India

HAVL reported weak performance mainly due to softer revenue growth in Cables and margin contraction in Switchgear and ECD due to product mix changes. The company expects softness in Wires sales to reduce with stability in copper prices and pickup in real estate demand in coming quarters. ECD growth momentum continues, driven by seasonal products on anticipation of healthy summer seasons and some uptick in consumer demand trends. With Lloyd strategy focused on growth with profitability, we estimate positive EBIT for FY25. Switchgear margin is not expected to go back to the 28% mark, but may improve to 24% in coming quarters from 18% in Q3FY25. We estimate revenue/EBITDA/PAT CAGR of 15.1%/19.5%/20.2% with ECD/Cables/Lloyd revenue CAGR of 14.8%/15.4%/18.7% over FY24-27E and EBITDA margin to reach 11.1% by FY27E (+120bps). Upgrade to ‘BUY’

Outlook

We downward revise Havells India’s (HAVL) FY25/FY26/FY27E earnings by 10.6%/10.2%/6.3% to factor in the lower margin in 9MFY25. We upgrade our recommendation to ‘BUY’ from ‘ACCUMULATE’ in view of the significant correction in stock price in the near past, with TP of Rs1,890 (earlier Rs2,036), based on DCF, which implies 54x FY27E earnings.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Havells India - 20012025 - prabhu