Cholamandalam Securities' research report on Havells India
HIL’s standalone revenue (net of GST) grew by 30.5%YoY to INR 19.7bn aided by Lloyds consumer durables, electrical consumer durable and lighting & fixtures segments. In 3QFY18, Lloyds Consumer Durables reported revenue of INR 2.93bn up 8.6% QoQ (+16% YoY). Revenue (net of GST) excluding Lloyd grew 14% YoY, aided by Lighting & Fixtures and electrical consumer durables segments. Standalone Gross margin improved by 30bps YoY to 39.7%; EBITDA at INR 2.62bn, up 37.5% YoY; EBITDA margins improved by 67bps YoY to 13.3%; Employee cost was flat, ad spend were higher due to brand investment in Lloyds consumer business (+50bps YoY) and other expenses (-80bps YoY). A.PAT grew by 17.9%YoY to INR 1.8bn, adjusting for the exceptional income of INR 210mn and A.PAT margin fell by 99bps YoY to 9.2% due to lower other income and higher effective tax rate. Company witnessed sharp increase in the creditor and Inventory days from 91/69 days in 2QFY18 to 104/73 days in 3QFY18, due to higher inventory of consumer durables of Lloyds in preparation for A/C season. Management has guided for a Capex of INR 2bn each for FY18 & FY19.
Outlook
We introduce FY20E estimates Revenue/EPS 20% / 22.8% YoY. At CMP the stock trades at 51.7X, 42.1X & 34.3X FY18E, FY19E & FY20E respectively. We roll over our valuation to FY20E, valuing the company 40XFY20E EPS to arrive at a target price of INR 665 (earlier: INR 459) and upgrade the stock to a BUY rating. Risks: Higher built-up in dealer inventory, competition from both foreign and domestic players and speedy market share gain from unorganized players.
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 - 30012018
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
