Edelweiss is bullish on Axis Bank has recommended buy rating on the stock with a target price of Rs 640 in its research report dated January 22, 2018.
Edelweiss' research report on Havells
Havells (HAVL) posted inline operational performance for Q3FY18 with sales/EBIDTA growth of 31/38% YoY. Key highlights: a) while 26/22% YoY growth for consumer durables/lighting was heartening, 11% YoY growth in switchgears was a pleasant surprise given sustained slow down in housing sector; b) margin ramp up across segments led to the 70bps improvement in EBIDTA margin which was largely due to base effect and to some extent improved product mix (especially higher growth in wires & switches); c) Lloyds’ value growth of 16% YoY, which on volume basis seems lower, is likely to pick up in Q4FY18 with onset of season and new labeling norms. With DeMon/GST mostly behind us, Havells is well placed to benefit from medium term tailwinds, viz: 1) shift from unorganised to organised; 2) rising premiumisation; and 3) potential ramp up in Lloyds’ profitability. Maintain ‘BUY’ with TP of INR 640 on FY20E, which is at 18% premium to sector given potential spurt in RoE/RoCE.
OutlookHAVL is slated to benefit from emerging tailwinds - ‘Housing/Power For All’, shift to organised players and risng premiumisation. Also, HAVL is best placed to attain scale across businesses with its new SBU structure and focused product-wise branding strategy, among others. At CMP, the stock trades at 31x FY20E EPS. Maintain ‘BUY/SO’.
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