Phani Sekhar, Fund Manager-PMS at Angel Broking told CNBC-TV18, "In Havells India there are three principle issues one is the weak consumer sentiments that is leading to very muted consumer demand something that has led the management to revise its guidance downwards. Secondly, is the sudden drops in European yields that has led to increased pension liabilities for Sylvania that will have an impact of the profitability and third is one the currency volatility that they are seeing in markets such as Mexico, Brazil and Colombia and that again will have its impact on its margins. So, if you combine all this three you have a domestic topline weakening followed by volatile margin profile and due to increased pension liabilities on the books a lower profitability. So all in all expect very subdued numbers for this financial year and may be for the next financial year as well.”
He further added, “Generally you can take off 8-10 percent for each year. The stock with a 25 percent correction is factoring in a lot of it but don’t expect any dramatic improvement considering that near term weakness persist there. So, from a long-term perspective the investors can hold on but the wait can actually be longer since the valuations are also at a pretty high premium at around 26 times.”
Disclosure: Analyst doesn’t have any personal positions neither do he own any of them in the PMS but his clients may have interest in it.
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