Hold Havells; target of Rs 393: Geojit BNP Paribas

Geojit BNP Paribas research report on HavellsHavells India Ltd (HAVL) is a leading player in electrical consumer goods in India. Its key verticals include switchgears, cables & wires, lighting fixtures and consumer appliances. Q1FY17 adjusted PAT which grew by 36% YoY to Rs145cr was above our expectation. EBITDA margin expanded 72bps to 13.7% led by higher contribution from all segments barring Cables & wires owing to fall in copper prices. Overall volume growth was strong, led by Cables & wires (20% YoY) and consumer appliances (19% YoY). We revise upwards our PAT estimates by 4.7% & 5.3% for FY17E & FY18E due to improvement operating income and higher other income. Cash rich and is looking for inorganic opportunities in domestic market. We maintain target P/E at 32x on FY18E EPS of Rs12.3 and maintain HOLD rating, with a target price of Rs393.

HAVL revenue growth momentum continues with reported revenue beating consensus estimates for second time in row led by strong volume growth in all the products segments. Management increased focus on new launches, internal controls, leveraging its existing brands and focus on retailers is reflecting on its performance. Going forward, we believe that HAVL is likely to maintain its premium valuation given its brand visibility, diversified product profile & wider distribution network. We maintain target P/E at 32x on FY18E EPS of Rs12.3 and maintain to Hold with a target price of Rs 393.