ICICIdirect.com's report on Havells India
Havells India’s (HIL) standalone revenues recorded abysmal growth of ~3% YoY supported by electronic consumer durables (ECD) wherein segment revenues grew 24% YoY. However, slackness in industrial activities, hit revenue growth of the cable segment (up ~2% YoY) while revenues of the switchgear & lighting segments declined ~5% & ~6% YoY, respectively, due to a slow pick-up in housing demand and a decline in revenues of the non-LED segment
A change in product mix coupled with saving in other expenses helped an improvement in EBITDA margins by 11 bps YoY to 14.5%. The company incurred a one-time cost of Rs 18 crore in Q4FY15 vs. Rs 42 crore in Q4FY14 on customer claim liability (of switchgear)
Decline in other income, higher depreciation charges and tax rate hit the bottomline as it declined ~11% YoY during Q4FY15
The performance of Sylvania remained under pressure in Q4FY15 as revenues declined ~2% YoY to €112.6 million while it reported an operating loss of €1.2 million after the €6.5 million provisioned for pension liabilities. It recorded a loss of €5.8 million against loss of €3.3 million during Q4FY14
"At the CMP, the stock is trading at a PE multiple of 32.3x FY16E and 26x FY17E. We have valued the stock using sum of the part method and value the standalone business at 24x FY17E EPS and Sylvania’s business at 5x FY17 EV/EBITDA and arrived at a target price of Rs 259. We expect Havells to record revenue, earnings CAGR of 9%, 15% for FY14-17E, respectively. Hold the stock", says ICICIdirect.com research report.
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