Buy Havells; target of Rs 680: Dolat Capital

Dolat Capital's research report on Havells

Q2 was weak on the margin front with input cost pressures visible. The one bright spot has been the inventory build-up for the festive season in the ECD business, as evident in the increased capital use. We expect some price action in H2 to offset rising costs. Festive season expected to be good - should get reflected in Q3 earnings. We believe in Havells structural story and maintain Buy with a TP of ` 680 valuing stock at 40xFY20E.

Outlook

We have tweaked our FY19 Sales/EBIDTA/PAT by 3%/-5%/-5% to account for lower margins in Q2. Having said that, a strong top line growth gives us comfort on the demand side. Structural growth story of Havells is still strong. Maintain Buy with a TP of ` 680, at 40xFY20E.