Motilal Oswal's research report on Havells India
Revenue grew 40% YoY (43% on an LTL basis) to INR26b, ahead of our estimate of INR24.5b. Gross margin expanded 190bp to 37.6%. EBITDA, adjusted for a forex loss of INR85m, stood at INR3.2b (+84% YoY), in line with our estimate. Adspend increased to INR1.16b (4.5% of sales v/s 4% in 1QFY18), while employee costs rose 22% YoY to INR1.9b. Adj. PAT of INR2.2b (+78% YoY) was marginally above our estimate of INR2.1b.
Outlook
We believe HAVL has built a strong business franchise, given its (a) successful development of brand, distribution and product portfolio, (b) demonstrated track record of accelerating growth via new launches, (c) healthy dividend payout and (d) robust return ratios. Maintain Buy and TP of INR645, with exit multiple of 38x Mar’20E EPS (10% premium to five-year average).
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