ICICI Direct recommended hold rating on Havells India with a target price of Rs 404 in its research report dated January 18, 2017.
ICICI Direct's research report on Havells India
We believe consumer durable companies will be key beneficiaries of the government’s key reforms like implementation of GST and pay hike. While the Seventh Pay Commission boosted the disposable income of 1.4 crore government employees, GST will bring down the effective tax rate of the company.
We expect the impact of demonetisation to normalise in consumer product categories with an improvement in liquidity. However, the industrial product category may see a slow pick-up in demand due to lower infrastructure spending and real estate demand. We believe the EBITDA margin will remain at historical level (14%) amid rising raw material prices coupled with higher advertisement expenses and employee cost. We roll over our valuation on FY19E and maintain our HOLD rating with a revised target price of Rs 404/share.
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First Published on Jan 19, 2017 05:59 pm