Hold Havells India; target of Rs 360: Axis Direct

Havells' (HAVL) Q1FY17 revenue at Rs 14.7 bn (up 17% YoY) was significantly ahead of our/Street expectation of Rs 13.5 bn. Growth wasacross categories – Switchgears/Lighting/ECD/Cables up 20%/22%/21%/5%YoY in value terms. EBIDTA margin expanded 80 bps to 13.7% (est: 13%) due to better segmental contribution as a result of operating leverage and annualized savings of Rs 400 mn from discontinuation of brand royalty payment to promoters. PAT growth was further boosted at 36% YoY due to higher other income. While we maintain FY17/18 est., we increase our target PE to 30x as we believe HAVL is best placed to benefit from a sustainable demand uptrend given its wide distribution channel, strong brand and

new product capabilities. Maintain HOLD with revised TP of Rs 360 (Rs 300 earlier).