January 30, 2017 / 13:54 IST
Havells (HAVL) used the chaos in Q3 as an opportunity to engage better with the channel – (1) Offered relaxations on annual targets and ongoing trade schemes, (2) Released working capital to the dealers from the QRG growth fund#, (3) Encouraged the conversion to mainstream/formal sector. The company also reported market share gains from both unorganized as well as organized players in an industry that contracted during the quarter.
OutlookWe believe the shift towards organized segment would be fast-tracked by demonetization and upcoming GST. Players like HAVL that have longstanding trade relationships and have a proactive vs. reactive philosophy stand to gain disproportionately. We maintain revenue growth at 13%/15%; marginally prune EBITDA to 14%/14.5% for FY17/18. Maintain HOLD with TP of Rs 360 (30x FY18E P/E).
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