Moneycontrol Bureau
Shares of Havells India fell 3.5 percent intraday on Thursday after its December quarter earnings missed street estimates. Its third quarter standalone profit fell 4.5 percent year-on-year to Rs 116.2 crore, dented by tax rate and slow growth in revenue. Standalone numbers include only Havells operations and do not include Sylvania income.
Sylvania's loss at operating level (EBITDA) stood at euro 0.5 million during the quarter as against profit of euro 7.4 million in same quarter last fiscal. EBITDA before change in pension liability stood at euro 5.6 million (against euro 8.7 million Y-o-Y).
Brokerages warn that Q3 miss may trigger earnings downgrade. Citing unattractive valuations, Deutsche Bank retains hold rating with a revised 12-month target of Rs 235 per share.
However, JP Morgan has an overweight rating with a target price of Rs 320 per share. The brokerage says Havells' valuations are now at a discount to other building product peers, which is not warranted, given its strong brand, diversified portfolio and extensive distribution network.
"Operating performance in Sylvania (international) has been improving at the margin. Overall domestic demand trends seem to have moderated in Q3 after a strong 1H, and uptick in festive season has been slower than expected. The stock price has seen a sharp correction since mid-December and more than adequately factors in near-term growth concerns,” JP Morgan says in a note.
Its consolidated net profit plunged 74.5 percent to Rs 35 crore during October-December quarter as Sylvania (European subsidiary) posted a loss of euro 10.7 million (as against profit of euro 1.7 million). Revenue grew 1 percent to Rs 2,115 crore in Q3FY15 from Rs 2,104 crore in the year-ago period while Sylvania Global's revenue during the same period declined to euro 110.8 million from euro 111.6 million.
(Posted by Nasrin Sultana)
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