Motilal Oswal bullish on Havells as the company has highest TAM in India

Lloyd's market share in the room air-conditioners segment is estimated to be around 10 percent now, which was 8 percent a few years ago, said Motilal Oswal.

Motilal Oswal is bullish on Havells India as the company's diverse product portfolio and entry into large home appliances segment through the acquisition of Llyod helped Havells India to gain highest total addressable market (TAM) of Rs 2 lakh crore in the consumer durable space.

TAM is the total available market which is used to refer to the revenue opportunity available for a product or service.

Motilal Oswal has reinitiated a buy call on the stock with a target price of Rs 1,580. The domestic brokerage firm believes that Havells India would maintain premium valuations given 29 percent earnings CAGR over FY23-24 and strong return ratios.

Lloyd's market share in the room air conditioners segment is estimated to be around 10 percent now, which was 8 percent a few years ago, said Motilal Oswal. Lloyd over the years has strengthened its portfolio by adding refrigerators, washing machines and televisions to become a full-stack consumer durable company. Havells India has set up two room
air-conditioner plants at Neemrana in Rajasthan and Sri City in Andhra Pradesh.

Havells India invested in enhancing brand affinity through multiple channels, resulting in a 77 percent year-on-year increase in advertising and promotional spending, said the domestic brokerage firm. Havells India’s strong research and development (R&D) capabilities led to a 48 percent year-on-year rise in R&D spending with 38 new patent applications and 213 design registrations. The company's ad spends made up 2.6 percent of revenue in FY23 and and is estimated to be at 3 percent in FY24-25. R&D spending was 1 percent of the company’s revenue in FY23.

Motilal Oswal expects Havells to deliver a 13 percent revenue CAGR over FY23-25. The brokerage firm expects net profit CAGR and EBITDA CAGR to be at 29 percent and 27 percent respectively over FY23-25. ​

Havells India shares closed 2.34 percent up at Rs 1366 on the National Stock Exchange.

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